American Energy
The Renewable Path to Energy Security
Worldwatch Institute
Center for American Progress
Worldwatch Institute
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Center for American Progress
The Center for American Progress is a nonpartisan research and educational institute dedicated to promoting a strong,
just, and free America that ensures opportunity for all. We believe that Americans are bound together by a common
commitment to these values and we aspire to ensure our national policies reflect these values. We work to find
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Copyright © by Worldwatch Institute
All rights reserved. Printed in the United States of America.
September 2006
This report is printed on recycled paper.
Cover photo credits: front, NREL; back, clockwise from top right:
Christophe Libert, stock. xchng; João Estêvão A. de Freitas, stock. xchng; Horizon Wind Energy
American Energy
The Renewable Path to Energy Security
Project Team
Worldwatch Institute
Christopher Flavin, President
Janet L. Sawin, Ph. D., Project Director and Senior Author
Lisa Mastny, Editor
Molly Hull Aeck
Suzanne Hunt
Amanda MacEvitt
Peter Stair
Center for American Progress
John Podesta, President and CEO
Ana Unruh Cohen, Ph. D., Co- Project Director
Bracken Hendricks, Co- Project Director
Theresa Mohin
September 2006
A M E R I C A N E N E R G Y
The American Energy Vision
merica is a nation blessed with bountiful natural resources and boundless entrepre-neurial
spirit. We have always prospered by facing daunting challenges and trans-forming
them into opportunities for innovation, industry, and growth. From the
opening of the transcontinental railway to the development of the microchip and the Internet
revolution, America has always risen to great challenges to become a stronger and more pros-perous
nation.
Today, America faces grave challenges in the field of energy— from the gathering storm of
global warming to a dangerous addiction to oil that jeopardizes our national and economic
security. We must meet these twin threats of climate change and oil dependence head- on, with
that same spirit of hope and optimism that has characterized our finest hours.
We, as a nation, have the ingenuity, know- how, and determination necessary to create an
energy- secure America. By working together, we can find exciting new ways to build America’s
use of domestic, non- polluting renewable energy. By capturing the energy of the wind and the
light of sun, the power of a mighty river or heat stored in the crust of the Earth, we can find
new untapped resources that create jobs, improve our security, and build the health of our peo-ple,
our planet, and our economy.
American Energy: The Renewable Path to Energy Security shows that an energy future based
on abundant and clean renewable resources is not only urgently needed, but achievable. The
time is ripe for a strong national commitment to enacting new policies at the federal, state, and
local levels that will allow the United States to become a world leader in building a 21st century
energy system. Meeting that challenge will require concerted action by governments, businesses,
and citizens across our nation.
We are committed to mobilizing our friends, communities, and leaders to share in this
vision for a clean, secure, and prosperous future with American Energy.
To sign the American Energy Vision Statement, download the
report, and learn more about what you can do to bring about
an energy- secure America, visit www. americanenergynow. org.
A
Table of Contents
2 1 S T C E N T U R Y E N E R G Y 6
V I S I O N F O R A M O R E S E C U R E
A N D P R O S P E R O U S A M E R I C A 8
Enhancing Energ y S ecur i t y 8
Creating Jobs 10
The Global Marketplace 11
Investment Opportunities 12
B U I L D I N G A N E W E N E R G Y
E C O N O M Y 13
Building for the Future 13
Meeting the Transportation Challenge 14
A New Future for Agriculture 15
Powering the Electricity Grid 16
Micro Power 17
A C L E A N E R , H E A LT H I E R A M E R I C A 18
Cleaner Ai r and Water 18
Climate Change and Energy 19
Conser ving Land and Water 20
R E S O U R C E S A N D T E C H N O L O G I E S 21
Energy Efficiency 21
Biofuels 22
Biopower 24
Geothermal Energy 25
Power from the Wind 26
Rooftop Solar Power 28
Deser t Solar Power 30
Solar Heating 31
Hydropower 32
Marine Energy 33
A M E R I C A N E N E R G Y P O L I C Y
A G E N D A 34
Sources of Additional Information 36
Contributors 37
Additional Resources 38
A M E R I C A N E N E R G Y
21st century energy
f there was ever a time when a major shift
in the U. S. energy economy was possible,
it is now. Three decades of pioneering
research and development by both the gov-ernment
and the private sector have yielded a
host of promising new technologies that turn
abundant domestic energy sources— includ-ing
solar, wind, geothermal, hydro, biomass,
and ocean energy— into transportation fuels,
electricity, and heat.
Today, renewable resources provide just
over 6 percent of total U. S. energy, but that
figure could increase rap-idly
in the years ahead.
Many of the new tech-nologies
that harness
renewables are, or soon
will be, economically
competitive with the fossil
fuels that meet 85 percent
of U. S. energy needs. With
oil prices soaring, the
security risks of petrole-um
dependence growing,
and the environmental
costs of today’s fuels
becoming more apparent,
the country faces com-pelling
reasons to put
these technologies to use
on a large scale.
Energy transitions take
time, and no single tech-nology
will solve our
energy problems. But
renewable energy tech-nologies,
combined with substantial improve-ments
in energy efficiency, have the potential
to gradually transform the U. S. energy system
in ways that will benefit all Americans. The
transition is easier to envision if you look at
the way the oil age emerged rapidly and unex-pectedly
in the first two decades of the 20th
century, propelled by technologies such as
refineries and internal combustion engines
and driven by the efforts of entrepreneurs
such as John D. Rockefeller.
Americans today are no less clever or
ambitious than their great- grandparents were.
A new and better energy future is possible if
the country can forge a compelling vision of
where it wants to be. Recent developments in
the global marketplace show the potential:
• Global wind energy generation has more
than tripled since 2000, providing enough
electricity to power the homes of about 30
million Americans. The United States led the
world in wind energy installations in 2005.
• Production of electricity- generating
solar cells is one of the world’s fastest growing
industries, up 45 percent in 2005 to six times
the level in 2000.
• Production of fuel ethanol from crops
more than doubled between 2000 and 2005,
and biodiesel from vegetable oil and waste
expanded nearly four- fold over this period.
Global investment in renewable energy
( excluding large hydropower) in 2005 is esti-mated
at $ 38 billion— equivalent to nearly 20
percent of total annual investment in the elec-tric
power sector. Renewable energy invest-ments
have nearly doubled over the past three
years, and have increased six- fold since 1995.
Next to the Internet, new energy technology
has become one of the hottest investment
fields for venture capitalists.
These dynamic growth rates are driving
down costs and spurring rapid advances in
technologies. They are also creating new eco-nomic
opportunities for people around the
globe. Today, renewable energy manufactur-ing,
operations, and maintenance provide
approximately two million jobs worldwide.
The United States will need a much
stronger commitment to renewable energy if
it is to take advantage of these opportunities.
As President Bush has said, America is
“ addicted to oil,” and dependence on fossil
fuels is rising, even in the face of high oil
prices and growing concern about global
warming. Of particular concern is the well
over 100 coal- fired power plants now on
the drawing boards of the U. S. electricity
industry— most of which lack the latest
pollution controls and could still be pumping
carbon dioxide into the atmosphere a half-century
from now.
In order to break the national addiction to
outdated fuels and technologies, America will
need a world- class energy policy. The promi-
6 A M E R I C A N E N E R G Y
Wind turbines in Minnesota
cornfield.
NREL
I
2 1 S T C E N T U R Y E N E R G Y
nent positions that Germany and Spain hold
in wind power, for example, and that Japan
and Germany enjoy in solar energy, were
achieved thanks to strong and enduring
policies that their legislatures adopted in the
1990s. These policies created steadily growing
markets for renewable energy technologies,
fueling the development of robust new
manufacturing industries.
By contrast, U. S. renewable energy policies
over the past two decades have been an ever-changing
patchwork. Abrupt changes in direc-tion
at both the state and federal levels have
deterred investors and led dozens of compa-nies
into bankruptcy. If America is to join the
world leaders and achieve the nation’s full
potential for renewable energy, it will need
world- class energy policies based on a sus-tained
and consistent policy framework at the
local, state, and national levels.
Across the country, the tide has begun to
turn. All but four U. S. states now have incen-tives
in place to promote renewable energy.
More than a dozen have enacted new renew-able
energy laws in the past few years, and four
states strengthened their targets in 2005, sig-naling
fresh political momentum. If such poli-cies
continue to proliferate, and are joined by
federal leadership, rapid progress is possible.
Several states are demonstrating just how
quickly renewable energy can take hold with
the right policies. California already gets 31
percent of its electricity from renewable
resources; 12 percent of this comes from non-hydro
sources such as wind and geothermal
energy. Texas, whose history is closely identi-fied
with the oil industry, now has the coun-try’s
largest collection of wind generators.
And Iowa produces enough ethanol that if
this were all consumed in- state, it would meet
half the state’s gasoline requirements.
A national coalition of more than 200
business and citizens organizations— led by
the farm and forestry sectors— has proposed a
national commitment to obtaining 25 percent
of U. S. energy from renewable resources by
2025. A new economic analysis by the Rand
Corporation for the Energy Future Coalition
concludes that if the United States were to get
25 percent of its electric power and trans-portation
fuels from renewable energy by
2025, the country's energy costs would be
reduced, with large savings occurring by 2015.
And national carbon dioxide emissions would
fall by one billion tons.
What would a U. S.
economy powered by
renewable energy look like?
Likely changes include:
• The energy economy
would become more
decentralized and efficient,
allowing homes and busi-nesses
to meet many of
their own energy needs.
• Dependence on
Persian Gulf oil would
decline, improving U. S.
national security.
• Trade deficits would
fall as oil imports decline,
reducing the roughly $ 300
billion the United States is
expected to spend on
imported oil in 2006.
• The air would be
cleaner, reducing asthma
and other respiratory
diseases and saving
American lives.
• Emissions of global
warming gases would decline, reducing the
threat to cities and coastal properties from
rising sea level and the threat to agriculture
from drought and higher temperatures.
• Hundreds of thousands of new jobs
would be created in the agricultural, manu-facturing,
and service companies that
would emerge to meet the demand for
renewable energy.
• Rural communities would be revitalized
as farmers and ranchers, who own the land
where much of the renewable energy can be
harnessed, would reap the benefits.
This vision will become reality only if
Americans come together to achieve it,
mobilized behind the goal of increasing our
national self- reliance and leaving a healthy
environment for the next generation. The
time is now.
A M E R I C A N E N E R G Y 7
2 1 S T C E N T U R Y E N E R G Y
U. S. Energy Consumption by Source, 2004
Renewables 6%
Nuclear 8%
Coal
23%
Natural Gas
23%
Petroleum
40%
Solar
1%
Wind
2%
Geo-thermal
6%
Hydro
45%
Biomass
47%
Average Annual Global Growth Rates
of Various Energy Sources, 2000- 2005
Growth rate (%)
0
5
10
15
20
25
30
Natural Oil
Gas
PV Wind Biofuels Coal
29.2
26.4
17.1
4.4
2.5
1.1
Nuclear
1.6
Source: EIA
Source: BP, Worldwatch
Enhancing Energy Security
merica’s dependence on imported
oil is undermining the country’s
national security by tying the U. S.
economy to unstable and undemocratic
nations, thus increasing the risk of military
conflict in political hotspots around the
globe. Renewable energy can reduce oil
dependence and improve the country’s
security in several key ways.
The United States currently imports some
13 million barrels of oil each day— over 60
percent of its total daily consumption— at an
annual cost of
$ 300 billion. If
current trends
continue,
America will
depend on
imports for 70
percent of its
oil by 2025. As
President Bush
said in his
2006 State of
the Union
address,
America is
“ addicted to
oil.” This
addiction requires billions of dollars in mili-tary
expenditures to secure the country’s
energy supply lines.
The United States was once the world’s
largest oil exporter, but domestic production
peaked in 1970. More recently, oil production
has peaked in countries such as Indonesia,
Norway, and the United Kingdom. As
accessible reserves in the world’s stable
regions have been depleted, oil extraction has
gradually shifted to more dangerous corners
of the globe. Today, the world’s oil frontier
includes a list of countries that mirrors a
catalog of global trouble spots, including
Angola, Azerbaijan, Chad, Nigeria, Sudan,
and Venezuela.
Most of these countries rank disturbingly
low in many measures of political liberty,
human rights, and corruption. Furthermore,
an estimated 85 percent of the world’s oil
reserves are now either owned or controlled
by national petroleum companies, which
greatly limits private investment in explo-ration
and infrastructure development.
The Middle East contains a remarkable 60
percent of the world’s remaining proven oil
reserves, and each day, nearly half the world’s
oil exports travel through the Straits of
Hormuz at the mouth of the Persian Gulf.
Because of their geographical proximity,
Europe and Asia import a larger share of their
oil from the Middle East than the United
States does. But this does not lessen the U. S.
exposure to imported oil. For three decades,
the Middle East has been the world’s marginal
oil supplier, and disruptions in the flow of oil
are reflected in the world price of energy and
the balance of global economic power.
In recent years, however, even the large oil
reserves in the Persian Gulf have been
insufficient to keep up with rising global
demand, most of it coming from the United
States, the Middle East, China, and other
Asian countries. If supply fails to keep up
with rising demand, oil prices could rise far
above their recent record highs. Every oil
price spike over the past 30 years has led to
an economic recession in the United States;
such price spikes will become more frequent
as global competition for remaining oil
supplies intensifies.
Full U. S. energy independence will take
decades to achieve; until then, national
security could be greatly improved if America
moved from its current path of rising oil
imports to reducing national reliance on oil.
That is an eminently achievable goal—
through both transportation efficiency
improvements and increased reliance on
biofuels and other renewable resources.
Improving efficiency and diversifying fuel
choices will take the pressure off energy
prices, while enabling the country to make
diplomatic and security decisions based on
American interests and values rather than the
relentless need to protect access to oil. In
many areas of the world, the U. S. diplomatic
hand would be greatly strengthened if energy
imports were going down rather than up.
8 A M E R I C A N E N E R G Y
Oil pipeline damaged by Iraqi
insurgents, 2005.
AP Images
A
V I S I O N F O R A M O R E S E C U R E A N D P R O S P E R O U S A M E R I C A
America’s current energy system under-mines
national security in other ways as well.
The centralized and geographically concen-trated
nature of the country’s power plants,
refineries, pipelines, and other infrastructure
leaves it vulnerable to everything from natu-ral
disasters to terrorist attacks. One year
after Hurricane Katrina crippled approxi-mately
10 percent of the nation’s oil refining
capacity, oil and gas production and trans-portation
in the Gulf of Mexico still had not
been fully restored.
Security experts believe that a well- orches-trated
physical or electronic attack on the U. S.
electricity grid could cripple the economy for
an extended period. It is estimated that the
2003 Northeast blackout cost between $ 4 bil-lion
and $ 10 billion over the course of just a
few days.
The country’s 104 nuclear power plants
and their associated pools of high- level
radioactive waste present another U. S. securi-ty
threat. If one of the planes that struck the
World Trade Center on September 11, 2001,
had instead hit the Indian Point nuclear plant
just north of New York City, the human and
economic toll of that fateful day could have
been vastly greater.
The distributed nature of many renewable
energy technologies helps reduce the risk of
accidental or premeditated grid failures cas-cading
out of control. An analysis of the 2003
Northeast blackout suggests that solar power
generation representing just a small percent-age
of peak load and located at key spots in
the region would have significantly reduced
the extent of the power outages.
A 2005 study by the U. S. Department of
Defense found that renewable energy can
enhance the military’s mission, providing
flexible, reliable, and secure electricity sup-plies
for many installations and generating
power for perimeter security devices at
remote installations. Renewable energy pro-vided
more than 8 percent of all electricity
for U. S. military installations by the end of
2005. Both the military and the Central
Intelligence Agency are turning to new light-weight
solar technologies to replace heavy
batteries in the field and for use in intelli-gence
applications.
Renewable energy can play an important
role in providing power to critical infrastruc-ture
in the aftermath of
catastrophes as well. For
example, the Louisiana
State Police used solar-powered
lighting in
critical areas around
New Orleans following
Hurricane Katrina; else-where
in Louisiana, the
lack of power slowed the
work of emergency and
recovery workers. Officials
at New Jersey’s Atlantic
County Utilities Authority
plan to install solar and wind power at a
waste- water facility to keep the plant operat-ing
during blackouts.
Renewable technologies can be coupled
with traditional backup diesel generators to
extend the fuel supply and
increase the total power
available. Renewable power
can also come back on line
much more quickly than
coal or nuclear power
plants can, helping to
reduce economic losses
associated with power fail-ures
and minimize the time
that critical facilities such
as hospitals and emergency
communication centers
must go without power,
thus saving lives. Some states already view
solar power, wind power, and other distrib-uted
technologies such as fuel cells as essential
for public safety and emergency preparedness.
As with oil dependence, the broader
energy security threats cannot be eliminated
overnight. But immediate steps to invest in a
diverse, decentralized energy system that
relies more heavily on domestic renewable
resources will allow the United States to
steadily enhance its security in the years ahead.
A M E R I C A N E N E R G Y 9
V I S I O N F O R A M O R E S E C U R E A N D P R O S P E R O U S A M E R I C A
1950 1960
I M P O R T S
1970 1980 1990 2000
25
15
10
5
0
Domestic Production and Consumption of Oil, 1950– 2005
Million barrels/ day
20 C o n s u m p t i o n
P r o d u c t i o n
1986 1990 1994 1998 2002 2006
70
80
50
60
20
30
40
10
0
Crude Oil Spot Prices, 1986– 2006
Dollars per barrel ( current $)
Source: EIA
Source: EIA
Creating Jobs
xpanding the use of renewable energy
will have a positive impact on employ-ment,
according to more than a dozen
independent studies analyzing the impact of
clean energy on the economy. Renewable
energy creates more
jobs per unit of
energy produced
and per dollar
spent than fossil
fuel technologies
do. Several studies
have shown that
greater reliance
on renewable ener-gy
would have
large, positive
impacts on the
U. S. economy,
creating significant
numbers of new jobs, driving major capital
investment, stabilizing energy prices, and
reducing consumer costs.
A transition away from fossil fuels and
toward renewable energy would create both
winners and losers, but
most studies show that
many more jobs would
be created than lost. A
2004 analysis by the
Union of Concerned
Scientists found that
increasing the share of
renewable energy in the
U. S. electricity system to
20 percent— adding
more than 160,000
megawatts ( MW) of
new renewable energy
facilities by 2020— would create more than
355,000 new U. S. jobs.
If the increased use of renewable energy
led to significant reductions in fossil fuel
prices, consumer savings on electricity and
natural gas bills would ripple through the U. S.
economy, spawning even more jobs. It would
also provide a tremendous economic boost to
rural communities. Most of the jobs created in
renewable energy would be high- paying posi-tions
for skilled workers, in fields such as
manufacturing, sales, construction, installa-tion,
and maintenance.
A 2004 Renewable Energy Policy Project
study determined that increasing U. S. wind
capacity to 50,000 MW— about five times
today’s level— would create 150,000 manu-facturing
jobs, while pumping $ 20 billion
in investment into the national economy.
Renewable heating and biofuels also offer
significant employment opportunities. The
U. S. ethanol industry created nearly 154,000
jobs throughout the nation’s economy in
2005 alone, boosting household income by
$ 5.7 billion.
Booming markets for renewables around
the world may provide additional opportuni-ties
for U. S. companies and workers. A 2003
study by the Environment California
Research and Policy Center determined that
California’s Renewable Portfolio Standard—
which required that 20 percent of electricity
come from renewable sources by 2017 ( a
target date since pushed to 2010)— would
create a total of some 200,000 person- years
of employment over the lifetimes of plants
built through that period, at an average
annual salary of $ 40,000. An estimated
78,000 of these jobs would serve overseas
export markets.
By contrast, employment in the fossil
fuel industries has been in steady decline for
decades, in large measure due to growing
automation of coal mining and other
processes. Between 1980 and 1999, while
U. S. coal production increased 32 percent,
related employment declined 66 percent,
from 242,000 to 83,000 workers. The coal
industry is expected to lose an additional
30,000- some jobs by 2020, even if coal
demand continues to rise. Further, high prices
for fossil fuels have a negative impact on the
economy, even leading to the transfer of
manufacturing jobs overseas. Expanding the
use of renewable energy can help minimize
these losses and provide new opportunities
for displaced workers.
10 A M E R I C A N E N E R G Y
V I S I O N F O R A M O R E S E C U R E A N D P R O S P E R O U S A M E R I C A
E
Installing PV system.
PowerLight Corporation
0 500 1000 1500 2000 2500
Jobs in Renewable Energy and Fossil Fuels
PV
Wind
Biomass
Coal
Natural Gas
Person- years per MWh
Source: REPP, GP, EWEA, CalPIRG, BLS
The Global Marketplace
enewable energy is rapidly becoming
big business around the world.
Between the mid- 1990s and 2005,
annual global investments in “ new” renewable
energy technologies ( excluding large hydro-power
and traditional biomass) rose from
$ 6.4 billion to $ 38 billion. It is estimated that
investment in renewable energy technology
could approach $ 70 billion by 2010.
Wind and solar power are the world’s
fastest growing energy sources today, with
capacity expanding at double- digit rates every
year over the past decade. Other sources are
growing rapidly as well, at rates far outpacing
those for traditional energy sources. The glob-al
power industry is now adding more wind
energy generating capacity to the world’s
grids each year than it is nuclear capacity.
Solar thermal capacity for domestic hot water
and space heating increased 16 percent in
2005, while global production of ethanol and
biodiesel grew by nearly 20 percent and 60
percent respectively that year.
The effects of such rapid growth include
impressive technology advances, dramatic
cost reductions, and an increase in political
support for renewable energy around the
world. Not surprisingly, these industries are
attracting some of the largest players in the
world energy market, including BP, Royal
Dutch/ Shell, and General Electric ( which has
moved into both the wind and solar cell mar-kets
in recent years). They are even drawing
other major companies— including Dupont
and Honda— into the energy arena for the
first time.
Most of the investment to date has
occurred in a relatively small number of
countries, driven by consistent, forward- look-ing
policies that aim to create markets for
renewable energy. Germany and Spain, for
example, have forged a dominant position in
wind energy over the past decade, and are
now turning to other renewables as well.
Japan and Germany lead in solar electricity,
with Japan responsible for nearly half of glob-al
solar cell production and Germany domi-nating
the marketplace. Brazil has moved to
the forefront of biofuel production with its
successful alcohol fuels program. And China
is the world leader in small hydropower and
solar water heating, with well over half the
global market in each.
Despite strong public
support and rapidly rising
interest in renewable ener-gy,
the United States has
not kept up with the strong
growth in renewables over
the past decade; as a result,
its market share has fallen
steadily. For example, while
U. S. solar cell manufactur-ing
has risen year by year,
the nation’s share of global
production has declined
from 44 percent in 1996
to below 9 percent in 2005.
Time is growing short
for the United States to
get back in the game and
compete for what could
be some of the largest
new markets of the next
few decades. A strong
partnership between
government and the
private sector is essential
if that kind of leadership
is to be achieved.
A M E R I C A N E N E R G Y 11
V I S I O N F O R A M O R E S E C U R E A N D P R O S P E R O U S A M E R I C A
1980 1985 1990 1995 2000 2005
Global Construction Starts for Wind
and Nuclear Power, 1980– 2005
Construction starts ( mw)
0
5000
10000
15000
20000
Nuclear
Wind
R
Green Power Markets
Voluntary purchases have played a major role in
driving the U. S. renewable energy market. By the end
of 2004, “ green power” demand had topped 2,200
MW of renewable capacity, up from 167 MW in 2000.
The U. S. Air Force is the nation’s leader in green
power purchasing, followed by Whole Foods Market
and a growing list of corporate and government
offices. The Statue of Liberty now gets 100 percent of
her power from renewable energy. In most cases,
green power subscribers pay a premium price for
electricity, but some customers in Colorado and Texas
are now paying less than non- subscribers due to rising
natural gas prices.
New York Stock Exchange.
Source: Worldwatch, BTM Consult, AWEA, EWEA
Investment Opportunities
nnual global investment in “ new”
renewable energy has risen almost
six- fold since 1995, with cumulative
investment over this period of nearly $ 180
billion. The $ 38 billion invested in renewables
in 2005 compares to the roughly $ 150 billion
invested worldwide in the conventional power
sector in 2004.
Market growth has
been driven by
technology
improvements, ris-ing
fossil fuel
prices, government
policies, and the
growing familiarity
of investors and
lenders with the
opportunities and
risks posed by the wide range of renewable
technologies and projects.
Renewable energy technologies tend to be
more capital intensive than traditional fossil
fuel technologies, with higher upfront costs.
At the same time, they do not expose owners
to the risks of fuel price
increases or the cost of
future retrofits or penal-ties
associated with cli-mate
change and other
environmental and health
problems. As a result,
renewable and fossil fuel
projects have very differ-ent
financial profiles.
In light of the long-term
risks of investing
in conventional energy
systems, institutional
investors, such as the California Public
Employees Retirement System ( CalPERS),
have begun directing large blocks of funds to
the environmental sector, including to renew-able
energy, much of it under the rubric of
sustainable or socially responsible investing.
But investing in renewables is no longer
just about doing the right thing; it’s also about
making money. Renewable energy is increas-ingly
viewed as an attractive investment by
private and public equity investors alike.
In November 2005, Goldman Sachs com-mitted
to investing more than $ 1 billion in
renewable energy projects, including biofuels,
solar power, and wind energy. The Nasdaq
stock market launched its “ Clean Edge U. S.
Index” in May 2006 to track the performance
of clean energy companies, including several
in the renewable energy and efficiency indus-tries.
In the world of venture capital, clean
energy is the hottest new investment arena,
having just passed semiconductors in annual
deal flow, according to the Cleantech Venture
Network. Kleiner Perkins general partner
John Doerr, one of the first investors in
Google, believes that green technologies
“ could be the largest economic opportunity
of the 21st century.”
Project lenders, principally banks, are pro-viding
loans to ethanol plants, wind farms,
and other large- scale renewable power proj-ects,
and direct lending by U. S. banks and
institutional investors is on the upswing. Still,
U. S. banks lag behind those in Europe. One
reason is that the financing of renewable
energy projects in the United States is domi-nated
by equity investments by the unregulat-ed
subsidiaries of electric utility companies,
which benefit from the Production Tax Credit
( PTC). The PTC has been available for wind
power and certain waste projects, and was
expanded in late 2004 to include solar, bio-mass,
and geothermal power plants.
The scores of ethanol plants now under
construction are being financed by a wide
array of agricultural coops, corporations such
as Archer Daniels Midland, and equity
investors ranging from large institutions to
Microsoft Chairman Bill Gates.
Public sector financing of renewable energy
projects has been evolving for several years and
is likely to increase substantially in the near
term. By mid- 2005, 17 Clean Energy Funds
worth nearly $ 3.5 billion had been established
in 13 states to support renewable energy
development through grants, subsidies, loans,
and investments that often leverage private
sector financing. Cities are getting involved as
well, using bond financing for renewable
energy and energy efficiency projects.
12 A M E R I C A N E N E R G Y
V I S I O N F O R A M O R E S E C U R E A N D P R O S P E R O U S A M E R I C A
Co- Organizers:
America’s leading conference for RE
executives, financiers and developers
www. euromoneyenergy. com
" Save the Date"
June 21- 22, 2006
Register by March 1
and save $ 250
Poster for Renewable Energy
Finance Forum, Wall Street,
2006.
ACORE/ Euromoney Energy Events
A
1995 1997 1999 2001 2003 2005
Global Investment in Renewable Energy, 1995– 2005
2005 dollars
10
0
20
30
40
Source: Martinot
Building for the Future
ommercial and residential buildings
consume about one- third of all U. S.
energy and two- thirds of U. S. elec-tricity.
In addition, they account for more car-bon
emissions than any other sector. But
buildings’ demand for energy can be dramati-cally
reduced, and renewable energy can meet
a significant share of the remaining needs.
The burgeoning “ green building” move-ment
seeks to tap consumer demand for envi-ronmentally
friendly, healthy, and affordable
homes and offices. Designers of green build-ings
aim to minimize energy consumption
with more- efficient materials and appliances
and integrated renewable energy systems; to
reduce demand for water and open space; to
use sustainably produced products ( including
recycled materials); and to provide convenient
access to public transportation.
The movement officially began with the
founding of the U. S. Green Building Council,
which in 2000 published LEED ( Leadership
in Energy and Environmental Design) stan-dards
to guide developers’ decisions on site
design, water use, indoor air quality, and
energy generation and use. Today, nearly
6,000 member organizations and companies
plan to construct new buildings or renovate
old ones according to LEED standards, and a
growing number of state and local govern-ments—
including in Atlanta, Boston, and San
Francisco— have incorporated them into laws
and regulations for new public buildings. By
mid- 2006, nearly 500 U. S. buildings were
LEED certified.
Solar energy is playing a role in many of
these buildings. The pharmacy chain
Walgreens plans to install solar photovoltaics
( PVs) on 112 of its stores, enabling the facili-ties
to meet 20– 50 percent of their power
needs on site. In Battery Park in New York
City, developers built the world’s first green
high- rise. The “ Solaire” apartments use 35
percent less energy and 65 percent less elec-tricity
than an average building, with solar
cells meeting at least 5 percent of demand. By
2009, all developments covering Battery Park
City’s 92 acres will be LEED certified and will
have solar panels.
The Chicago Center for Green Technology
uses geothermal energy for heating and cool-ing,
and the Dallas/ Fort Worth
Airport relies on solar energy
for air conditioning, reducing
cooling costs by 91 percent at
times of peak demand. And
major housing developers such
as Centex and Premier Homes
are now incorporating solar
into new homes in California.
There are good economic
reasons for constructing green
buildings, which generally have
healthier employees, higher
worker productivity, lower turnover, and sig-nificant
energy and water savings. A study by
the California Sustainable Building Task Force
found that an upfront
investment of 2 per-cent
( the average cost
premium) in green-building
design results
in average savings of at
least 10 times the ini-tial
investment over a
20- year period. And
costs are falling as
those who design, con-struct,
and maintain
green buildings gain
experience. Further,
green buildings tend to
have higher occupancy
rates and rents, and
therefore better
returns on investment,
than conventional
buildings. And gener-ating
power and heat
on- site with renewable
energy can reduce the
chances of a power
outage, while hedging
against an increase in
electricity prices.
A M E R I C A N E N E R G Y 13
B U I L D I N G A N E W E N E R G Y E C O N O M Y
C
More Examples of Green Buildings
in the United States
Ford Motor Company installed a “ green roof” on the 10.4-
acre rooftop of its Rouge River Plant in Michigan in 2004.
Replacing dark, heat- absorbing roof surfaces with plants
keeps buildings cooler in summer and warmer in winter,
reducing energy use for heating and cooling by 10– 50 per-cent;
it also filters the air and rainwater.
A new building at the Natural Energy Laboratory of Hawaii
is “ net zero energy,” using no electricity from the grid.
Seawater is piped in for space cooling, and condensation
from the pipes is used for irrigation.
The office tower 4 Times Square, headquarters of Condé
Nast, is powered by fuel cells and has a PV façade;
recycled materials make up 20 percent of the building.
Pittsburgh’s David L. Lawrence Convention Center includes
numerous features that reduce the energy bill by at least
one- third, or enough to meet the needs of 1,900 house-holds.
Its curved roof allows hot air to escape through vents
and cool breezes to flow in from the river. Construction
costs were comparable to or lower than other ( non- green)
centers built in recent years.
Genzyme’s headquarters in Cambridge, Massachusetts, was
the first large U. S. office building to achieve “ platinum”
LEED standards, the highest level of certification. The build-ing
includes a green roof, uses natural light and ventilation,
is sited on a reclaimed brownfield and close to a subway
station, and provides indoor bike storage, showers, and
lockers for employees.
David L. Lawrence
Convention Center,
Pittsburgh, Pennsylvania.
Brad Keinknopf
Meeting the Transportation Challenge
ransportation accounts for two- thirds
of U. S. oil consumption and is the
predominant source of domestic
urban air pollution. Recent gasoline price
increases have combined with growing envi-ronmental
concerns to spur interest in new
fuels to run the nation’s
transportation fleet,
which relies on oil for
more than 95 percent of
its energy. Renewable
fuels currently represent
only around 2 percent
of the total.
The immediate
options for running the
U. S. transportation
system on renewable
energy are more limited than those for
other sectors of the economy, such as build-ings
and industry. In the short term, the main
potential is in the use of biofuels derived from
crops and wastes. In the long term, electricity
and hydrogen derived from sources
like wind and solar energy are likely
to become viable alternatives.
Most cars and SUVs on the road
today can run on blends of up to 10
percent ethanol, and motor vehicle
manufacturers already produce
vehicles designed to run on much
higher ethanol blends. Ford,
DaimlerChrysler, and GM are
among the automobile companies
that sell “ flexible- fuel” cars, trucks,
and minivans that can use gasoline
and ethanol blends ranging from
pure gasoline up to 85 percent
ethanol ( E85). By mid- 2006, there were
approximately six million E85- compatible
vehicles on U. S. roads.
The goal now is to expand the market for
biofuels beyond the farm states where they
have been most popular to date. Flex- fuel
vehicles are assisting in this transition because
they allow drivers to choose different fuels
based on price and availability. The Energy
Policy Act of 2005, which calls for 7.5 billion
gallons of biofuels to be used annually by
2012, will also help to expand the market.
The impact of bio- fueled cars can be maxi-mized
by making them as efficient as possible.
A new generation of highly efficient and
clean- burning diesel engines is one option.
Another is hybrid gas- electric technology that
is up to 30 percent more fuel efficient than
conventional vehicle technology.
A federal law provides tax credits for pur-chasers
of hybrid and alternative fuel vehicles.
Many states also offer incentives for buying
these vehicles. The same “ green” consumers
who have made hybrid gas- electric vehicles
hot items in auto showrooms in recent years
are now showing strong interest in biodiesel
and other renewable fuels.
Running motor vehicles on solar energy
and wind power is more challenging, though
not a pipe dream. Electric cars on the market
today can be plugged into an outlet and
recharged at home. Homeowners with
rooftop solar systems— or in regions rich in
hydro or wind power— can already fuel their
vehicles with renewably generated electricity.
And a new generation of plug- in hybrids will
soon provide a similar opportunity, while giv-ing
drivers the option of extending the typical
100- mile range of an electric vehicle by using
gasoline or biofuel in the tank.
In the more distant future, hydrogen offers
a means of storing energy sources such as
solar and wind power. Hydrogen can be pro-duced
from water using any energy source
that generates electricity. Because it can be
readily stored in tanks and transported in
pipelines, hydrogen is a logical long- term
replacement for oil and natural gas. A new
generation of experimental fuel- cell vehicles is
being developed that efficiently uses hydrogen
to turn the wheels, with water vapor the only
tailpipe emission.
As renewable energy becomes a larger part
of the electricity system and as costs decline,
renewably generated hydrogen is likely to
become a growing part of the transportation
fuel mix.
14 A M E R I C A N E N E R G Y
B U I L D I N G A N E W E N E R G Y E C O N O M Y
T
Bus fueled by soy biodiesel.
NREL
Estimated Number of Alternative-
Fueled Vehicles in Use in the United
States, by Fuel, 2000 and 2004
Fuel 2000 2004
Liquefied Petroleum
Gases ( LPG) 4,435 9,036
Natural Gas 9,912 4,292
Hydrogen 0 77
Ethanol 600,832 652,779
Electricity 18,172 2,633
Total 633,351 668,817
Source: EIA
A New Future for Agriculture
enewable energy— particularly bio-fuels
and wind power— could provide
a new source of revenue for thousands
of farmers and agricultural processors, creat-ing
economic opportunities in rural areas that
have suffered from decades of falling crop
prices. Already, the growing ethanol and bio-diesel
industries are providing jobs in plant
construction, operations, and maintenance,
mostly in rural communities. According to
the Renewable Fuels Association, the ethanol
industry created almost 154,000 U. S. jobs in
2005 alone, boosting household income by
$ 5.7 billion. It also contributed about $ 3.5
billion in tax revenues at the local, state, and
federal levels.
The emerging industry of cellulosic
ethanol, with its low- cost feedstock and new
conversion techniques, is poised to offer even
greater economic and environmental benefits.
Farmers can reduce disposal costs and gain a
secondary source of income by converting
high- cellulose crop residues into fuel.
Marginal land that is unsuitable for most
cultivation can be planted with a variety of
fast- growing energy crops that are less
resource- intensive than annual crops, require
less maintenance, and can improve degraded
soils while providing wildlife habitat.
People in rural areas can benefit from
biofuels in three ways: wealth remains in the
local community, farmers are paid for pro-ducing
feedstock, and biofuels provide them
with cleaner energy at lower cost ( nearly half
of U. S. soybean farmers now use biodiesel,
for example). Some proponents foresee a
future in which local “ bio- refineries” churn
out a combination of fuels, chemicals, phar-maceuticals,
and plastics— creating local jobs
and tax revenues while gradually replacing
the oil refineries that are central to today’s
oil- based economy.
Farmers and rural communities can also
increase their revenue by tapping local wind
resources to generate electricity. Some of the
country’s most valuable winds sweep across
some of its poorest farmlands. Here, farmers
and ranchers can generate income even when
cropland is parched from drought. They can
become wind developers themselves, or opt to
have others install turbines on their land and,
in turn, receive annual lease payments or
share the revenues from a wind project.
Payments range from $ 1,000 to $ 4,000 a year
for each wind turbine installed, as much as
doubling the economic yield from the land.
While turbines harness the wind, farmers
and ranchers can continue to raise crops and
livestock beneath them.
Solar energy benefits farmers as well, by
lighting and heating buildings and green-houses,
drying crops, and powering water
pumps and irrigation systems. One of
California’s largest vegetable growers now irri-gates
600 acres of farmland with solar power,
helping to ease pressure on the California
electricity grid during peak demand periods.
In early 2006, rising awareness of the myriad
benefits of renewable energy led a cross- sec-tion
of agriculture and forestry groups to
launch “ 25 x ’ 25,” a call to meet 25 percent of
total U. S. energy demand by the year 2025
with clean, secure, and renewable energy from
America’s farms, ranches, and forests. The
movement is quickly gathering steam, with
support from a broad coalition of forces,
including the agriculture and forestry com-munities,
organized labor, businesses, security
hawks, and religious and environmental
groups. By mid- 2006, 25 x ’ 25 had been
endorsed by 13 governors and 4 state legisla-tures,
32 U. S. Congressmen, and a bipartisan
group of 19 influential U. S. Senators.
A M E R I C A N E N E R G Y 15
B U I L D I N G A N E W E N E R G Y E C O N O M Y
Cows grazing beneath
turbines, Blue Canyon Wind
Project, Oklahoma.
R Horizon Wind Energy
Powering the Electricity Grid
he U. S. economy, as well as public
health and safety, depends on a
reliable power system that provides
electricity 24 hours a day, 365 days a year.
The costly disruptions resulting from the
Northeast blackout of August 2003 were a
powerful reminder of how dependent the
country is on the reliability of large power
plants and the transmission networks that
connect them.
The U. S. electric power industry now relies
on large, central power stations, including
coal, natural gas, nuclear, and hydropower
plants that together generate more than 95
percent of the nation’s electricity. Over the
next few decades, renewable energy could
help to diversify the nation’s bulk power sup-ply.
Already, renewable resources ( excluding
large hydropower) produce 12 percent of
northern California’s electricity.
Most electric utilities operate a combina-tion
of baseload plants ( often coal and
nuclear) that operate most of the time and
others ( often natural gas)
that are utilized only when
demand is high. Some
renewable power plants
can provide steady power
whenever it’s needed—
using geothermal, concen-trating
solar ( with stor-age),
and bioenergy, for
example. Other power
sources are intermittent,
meaning they are available
only when the sun is
shining or the wind is
blowing. Yet even intermittent sources can
add significant value to the system by
providing electricity when it is most needed
and most costly to produce with conventional
sources. In many parts of the country, for
example, periods of peak sunlight coincide
with peak power demand for air conditioning.
All power systems rely on backup genera-tors,
since even baseload plants must close
occasionally due to technical problems. In
the case of intermittent renewables, wind
resources can already be forecast at least two
days in advance, and fluctuations in power
output can be reduced if not eliminated by
spreading solar or wind generators across a
sufficiently wide region. Studies show that
even when wind power alone provides 20 per-cent
of the total electricity on a regional grid—
as it does in Denmark and large parts of
Germany— backup capacity is rarely needed.
Above that level, some backup capacity may be
required, but at much less than a 1: 1 ratio. In
the future, new technologies like advanced gas
turbines and fuel cells, as well as new storage
devices, will likely reduce the cost of providing
backup capacity, allowing much higher levels
of dependence on intermittent generators.
Renewable energy sources also provide
grid operators with real economic benefits ( in
addition to their peaking value) that are just
beginning to be recognized. Conventional
power plants based on coal and nuclear power
can take 5– 15 years to plan and construct, a
serious disadvantage given the uncertainties
of future power demand and the risks of bor-rowing
hundreds of millions of dollars while
the plants are built. Construction lead times
for large renewable projects are often in the
range of 2– 5 years, reducing the risk to utili-ties
and allowing capacity to be added incre-mentally
to match load growth. According to
FPL Energy, it can take as little as 3– 6 months
from ground breaking to commercial opera-tion
with new wind farms. Once on line,
renewable facilities can begin operation more
rapidly than conventional power plants after
blackouts, reducing associated economic and
security costs.
At a time when the price of natural gas, the
most popular fuel for recently constructed
power plants, has increased significantly,
renewable power has become a valuable
component of a utility power portfolio and a
hedge against future fuel- price increases.
Wind farms are already competitive with gas
and coal, and GE Wind has predicted that
wind turbine sales could surpass gas turbine
sales within the next few years. Since renew-able
power plants are emissions free, or close
to it, they also represent a hedge against
future environmental regulations, including
possible caps on mercury and carbon-dioxide
emissions.
16 A M E R I C A N E N E R G Y
B U I L D I N G A N E W E N E R G Y E C O N O M Y
T
Wind farm with transmission
tower.
Paul Langrock/ Zenit/ Greenpeace
U. S. Net Electricity Generation by Source, 2005
Renewables 9%
Nuclear
21%
Fossil fuels
70%
Source: EIA
Micro Power
lthough most of today’s electricity
comes from large, central- station
power plants, new technologies offer
a range of options for generating electricity
where it is needed, saving on the cost of
transmitting and distributing power and
improving the overall efficiency and reliability
of the system. These new options include
renewable energy technologies such as
rooftop solar cells and bio- fueled generators,
as well as devices such as gas turbines and fuel
cells that may run on energy sources derived
from fossil fuels.
Micro ( or distributed) power is in effect a
return to the vision of Thomas Edison, who
designed small, city- based power plants, the
first of which was built near Wall Street in
1882. Economies of scale quickly rendered
this approach obsolete, but new technologies
that can be mass- produced at low cost are
bringing us back to the future.
Locally based generators that connect to
local distribution lines generally have generat-ing
capacities of 5 MW or less, and are sited
in or adjacent to residential, commercial, or
public buildings. These micro power plants
provide additional value to the electricity
system because they do not require extra
investment in transmission or distribution,
and they reduce or eliminate line loss. Their
popularity is also fueled by the need for
reliable power supplies for the electronic
equipment that is so central to today’s econo-my.
Since most power outages are caused by
weather- related damage to power lines,
locally based generators can dramatically
improve reliability.
Japanese companies have demonstrated
that the development of simple, integrated
technology packages can quickly and signifi-cantly
reduce the cost of home- sized solar
generators. Recently, U. S. companies have
introduced so- called “ plug- and- play” solar
systems that are modular and elegant— easily
integrated into a new or existing building
without the need for custom design work.
Solar experts believe that as these systems
become more standardized, commercial and
residential consumers will see the units
proliferating in their neighborhoods over the
next few years.
One business that has taken advantage of
small- scale solar power is the FedEx
Corporation. In 2005, FedEx completed a
solar electric system atop
its hub at Oakland
International Airport.
The 81,000- square- foot
system generates enough
electricity to power 900
homes, and provides 80
percent of the facility’s
peak load while protect-ing
the roof from UV
rays and reducing heat-ing
and cooling needs.
That micro generators
are not widely used today reflects in part the
fact that everything from electricity laws to
environmental and tax regulations are often
structured in ways that disadvantage these
technologies.
Despite such
impediments,
businesses and
consumers
increasingly
demand the abil-ity
to generate
their own power
and to sell elec-tricity
to other
consumers at a
fair price. Under
“ net- metering”
laws that have
been enacted in
several states, it is now possible for consumers
to sell some of their extra power back to the
grid at the same price the consumer pays for
it. These laws have helped spur the growing
popularity of rooftop solar power systems,
particularly in California.
A M E R I C A N E N E R G Y 17
B U I L D I N G A N E W E N E R G Y E C O N O M Y
Individual Utilities
Statewide Programs
U. S. States with Net Metering Laws
C A N A D A
U N I T E D S T A T E S
0
300mi
300km
0
MEXICO
A
120 kW solar electric array
powering Domaine Carneros’
Winery, Napa, California.
PowerLight Corporation
Source: DSIRE
Cleaner Air and Water
he emissions- free nature of most
renewable energy technologies is one
of their principle advantages com-pared
to fossil fuels.
Power plants, motor
vehicles, and industries
that burn fossil fuels
emit a host of pollu-tants
that imperil
human health, impose
heavy economic costs,
and degrade the natural
environment.
A 2002 study pub-lished
in the Journal of
the American Medical
Association determined that exposure to air
pollution poses the same risks of dying from
lung cancer and heart disease as does
living with a smoker. A 2004 study
by Abt Associates estimated that fine
particulate pollution from power
plants causes nearly 24,000 prema-ture
deaths annually in the United
States. Thousands more Americans
experience asthma attacks, and mil-lions
of workdays are lost annually
due to pollution- induced illnesses.
The result is more than $ 160 billion
per year in medical expenses due to
air pollution from power plants alone.
Sulfur emissions, resulting prima-rily
from the burning of coal in con-ventional
power plants to produce
electricity, are the main source of
acid rain, which damages crops,
forests, and buildings and can make
lakes and rivers too acidic to support
life. Nitrogen oxides ( NOx) combine
with other chemicals to form
ground- level ozone, or smog. The
burning of fossil fuels also releases
volatile organic compounds. Some
combine with NOx to create smog;
others are directly toxic and are asso-ciated
with cancer, developmental
disorders, and adverse neurological and
reproductive impacts.
Coal and oil contain toxic metals such as
mercury, arsenic, and lead that are released
into the air when these fuels are burned and
find their way into drinking- water supplies.
Coal- fired power plants are the nation’s
largest human- caused point source of mercu-ry
pollution, emitting about 48 tons into the
air each year. They alone are responsible for
42 percent of the nation’s mercury emissions.
Once in the environment, toxic metals
accumulate in fatty tissue of humans and
animals. In August 2004, the head of the EPA
warned that fish in nearly all of the nation’s
lakes and streams are contaminated with
mercury. Studies show that one in six
American women of childbearing age may
have blood mercury concentrations high
enough to cause damage to a developing
fetus. Mercury damage can affect the central
nervous system and may damage reproduc-tive,
immune, and cardiovascular systems.
Conventional power plants require
significant amounts of water for ongoing
maintenance and cooling. Withdrawal of
surface water can kill fish, larvae, and other
organisms trapped against intake structures,
while wastewater discharge releases chemicals
and heat into surrounding ecosystems,
affecting plants, fish, and animals.
Fuel extraction and transport pose severe
health and environmental threats as well.
Black- lung disease kills an estimated 1,500
former coal miners annually. In the
Appalachian states of West Virginia, Kentucky,
and Tennessee, mountaintop coal mining
( which involves blasting away mountain tops
to expose coal seams within) has buried or
polluted more than 1,200 miles of streams,
destroyed more than 7 percent of Appalachia’s
forests, and eliminated entire communities. If
current trends continue over the next decade,
affected land will cover 2,200 square miles, an
area larger than the state of Rhode Island.
The European Union has found that envi-ronmental
and health costs associated with
conventional energy and not incorporated
into energy prices equal an estimated 1– 2
percent of EU gross domestic product,
excluding costs associated with climate
change. A dramatic increase in our use of
renewable energy could significantly reduce
these burdens.
18 A M E R I C A N E N E R G Y
T
Costs of Air Pollution
More than 150 million Americans— more
than half the nation’s people— live in
areas where air quality threatens their
health.
A 2005 study by the Mount Sinai School
of Medicine’s Center for Children’s
Health and the Environment estimated
that the cost in lost productivity to the
U. S. economy due to mercury’s impact on
children’s brain development totaled $ 8.7
billion per year.
Researchers at the Harvard University
School of Public Health and Brigham and
Women’s Hospital in Boston found that
each 1 microgram decrease in soot per
cubic meter of air reduces by 3 percent
the U. S. death rates from cardiovascular
disease, respiratory illness, and lung
cancer— thereby extending the lives of
75,000 people annually.
The city of Atlanta improved public tran-sit
and limited downtown vehicle use for
the 1996 Olympic Games, cutting peak
ozone concentrations by more than 25
percent and reducing by 42 percent the
number of asthma acute care events in
the Georgia Medicaid claims files.
A C L E A N E R , H E A L T H I E R A M E R I C A
Emissions from an oil refinery
in San Pedro, California.
Sean Carpenter, Stock. xchng
Climate Change and Energy
ost renewable energy sources add
little or no carbon dioxide ( CO2)
to the atmosphere. They are there-fore
one of the key elements of a global strat-egy
to reduce the threat of climate change.
Atmospheric CO2 concentrations have
climbed 20 percent since measurements began
in 1959 and nearly 36 percent since the dawn
of the Industrial Revolution. Over the past
century, the average global temperature has
risen by 1.8 degrees Fahrenheit; more than
half of this warming has taken place in the
past 30 years. The burning of fossil fuels for
energy production and use is responsible for
an estimated 70 percent of the global warm-ing
problem, and the United States accounts
for about one- quarter of total global emissions.
In its 2001 report, the Intergovernmental
Panel on Climate Change, the most authorita-tive
scientific body synthesizing the vast
research on climate change, concluded that
“ there is new and stronger evidence that most
of the warming observed over the last 50 years
is attributable to human activities.” Expected
impacts of global warming include sea- level
rise; flooding of coastal areas; increased fre-quency
and severity of floods, droughts,
storms, and heat waves; reduced agricultural
production; massive species extinction; and
the spread of vector- borne diseases such as
malaria and dengue fever.
There is growing concern that societies and
ecosystems will not have time to adapt to
these changing conditions. Rising economic
losses due to weather- related disasters are part
of a trend being linked to climate change. The
World Health Organization estimates that
climate change is already responsible for
150,000 deaths annually. While developing
countries will likely see the highest toll,
impacts will be significant in industrial
nations as well, including the United States.
The concentration of CO2 in Earth’s
atmosphere is now higher than at any time in
the past 650,000 years, and the rate of
increase is accelerating. In June 2004, a new,
more- accurate atmospheric model revealed
that global temperatures could rise more rap-idly
than previously projected. The extent of
warming by the end of this century will be
determined by the amount of fossil fuels we
continue to burn and the sensitivity of the
climate system.
The steady rise of atmospheric CO2 lev-els—
and the consequent risk of climate
change, whether gradual or abrupt— is receiv-ing
the attention of everyone
from urban planners to Pentagon
strategists. U. K. Chief Scientific
Advisor David King has said that
climate change is “ the most
severe problem that we are facing
today— more serious even than
the threat of terrorism.” At their
July 2005 meeting in Gleneagles,
Scotland, G- 8 leaders issued a
statement acknowledging that
“ climate change is a serious and
long- term challenge that has the
potential to affect every part of
the globe.” And former U. S. pres-ident
Bill Clinton has warned
that climate change is the only
problem “ that has the power to
end the march of civilization as
we know it,” adding that a
“ serious global effort” to promote clean
energy is required.
Global emissions must be reduced dramat-ically
over this century to
avoid catastrophic climate
changes. The sooner soci-eties
begin to reduce their
emissions, the lower will
be the impacts and associ-ated
costs of both climate
change and emissions
reductions. The Kyoto
Protocol, which entered
into force in early 2005,
requires 39 industrial
nations to reduce their
emissions. Although the
United States is not party to the treaty, U. S.
companies that operate within signatory
countries face pressure to reduce their emis-sions
as well. Dramatically increasing the use
of renewable energy, alongside significant
improvements in energy efficiency, will
provide an important means of doing so.
A M E R I C A N E N E R G Y 19
M
Hurricane Katrina, late August
2005.
NASA- Goddard Space Flight Center
A C L E A N E R , H E A L T H I E R A M E R I C A
1950 1960 1970 1980 1990 2000
6000
4000
2000
0
U. S. Carbon Emissions from Energy, 1950– 2004
Millionmetric tons
Source: EIA
Conserving Land and Water
enewable energy is commonly viewed
as too land- intensive to be practical.
Yet harnessing renewable energy
requires less land and water than does our
current energy system. Disputes over the loca-tion
of renewable energy projects— particu-larly
wind farms, such as
the Cape Wind project
off the Massachusetts
coast— are not uncom-mon;
they are no less so
for fossil or nuclear proj-ects.
Solid regulatory
procedures and strong
public participation can
ensure that a balance is
struck between energy production and envi-ronmental
and aesthetic considerations.
Studies show that wind resources in three
states— Kansas, North Dakota and Texas—
could in principle
meet all current
U. S. electricity
needs. Although
wind farms
appear to occupy
as much as 60
acres per
megawatt,
depending on the
terrain, the tur-bines
and access
roads actually
cover under
three acres per
megawatt. By
conservative esti-mates,
this means that fewer than 1,400 acres
are needed to produce one billion kilowatt-hours
( kWh) of electricity each year. Farming
and grazing can continue beneath the wind
turbines, enabling farmers and ranchers to
supplement their incomes with payments for
green power production. Moreover, the Great
Plains, where most of the best wind resource
is located, is one of the least densely populat-ed
parts of the country.
Geothermal electricity is estimated to need
just 74 acres of land to generate one billion
kWh of electricity annually, enough to power
nearly 94,000 American homes. By contrast,
coal- fired power requires 900 acres per billion
kWh generated annually— most of it for min-ing
and waste disposal. The geothermal plant
can go on producing electricity on the same
land for a century or more, as can wind
farms, while a coal plant depends on mining
hundreds of additional acres each year.
Solar power plants that concentrate sun-light
in desert areas require 2,540 acres per
billion kWh. On a lifecycle basis, this is less
land than a comparable coal or hydropower
plant requires, and because most deserts are
sparsely populated, there is plenty of room for
solar power plants. A little over 4,000 square
miles— equivalent to 3.4 percent of the land
in New Mexico— would be sufficient to pro-duce
30 percent of the country’s electricity.
In addition, sunlight can be used to produce
power without using any land at all, simply by
installing solar cells on the available roofs and
walls of U. S. buildings. It is estimated that the
nation has 6,270 square miles of roof area and
2,350 square miles of façades that are suitable
for harnessing solar power. Mounting solar
panels on just half of this area could supply
nearly 30% of U. S. electricity.
Solar and wind power require virtually no
water to operate. Large fossil and nuclear
plants, in contrast, need enormous quantities
of water for cooling and ongoing mainte-nance.
According to the Union of Concerned
Scientists, a typical 500- MW coal plant takes
in 2.2 billion gallons of water— enough for a
city of 250,000 people— each year simply to
produce steam to drive its turbines.
Crops grown for biofuels are the most
land- and water- intensive of the renewable
energy sources. In 2005, about 12 percent of
the nation’s corn crop ( covering 11 million
acres of farmland) was used to produce four
billion gallons of ethanol— which equates to
about 2 percent of annual U. S. gasoline con-sumption.
For bioenergy to make a much
larger contribution to the energy economy,
the industry will have to accelerate the devel-opment
of new feedstocks, agricultural prac-tices,
and technologies that are more land and
water efficient. Already, the efficiency of bio-fuels
production has increased significantly.
20 A M E R I C A N E N E R G Y
A C L E A N E R , H E A L T H I E R A M E R I C A
Missouri farmland.
USDA
R
Solar Power
M E X I C O
C A N A D A
U N I T E D S T A T E S
0
300mi
300km
0
( turbines and access
roads occupy just 5%
of this area)
Geothermal
Energy
Wind Power
Land Required to Produce 30 Percent of the Nation’s Electricity
with Wind Power, Solar Power, and Geothermal Energy
Source: NREL, AWEA, Pimentel et al.
Energy Efficiency
mproving energy efficiency represents the
most immediate and often the most cost-effective
way to reduce oil dependence,
improve energy security, and reduce the
health and environmental impact of our ener-gy
system. By reducing the total energy
requirements of the U. S. economy, improved
energy efficiency will make increased reliance
on renewable energy sources more practical
and affordable.
Energy efficiency has played a critical role
in the U. S. energy supply in recent decades,
reducing total energy use per dollar of gross
national product ( GNP) by 49 percent since
the 1970s. Compared to a 1973 baseline,
America now saves more energy than it pro-duces
from any single source, including oil.
Efficiency improvements stabilize energy
prices by reducing demand, while also deliver-ing
the same services we value— whether hot
showers or cold drinks— at lower cost.
The potential for additional energy savings
is vast: U. S. energy use per dollar of GNP is
nearly double that of other industrial coun-tries.
More than two- thirds of the fossil fuels
consumed are lost as waste heat— in power
plants and motor vehicles.
The fuel economy of new U. S. motor
vehicles advanced rapidly, from 14 miles per
gallon in the mid- 1970s to 21 miles per gallon
in 1982, driven by rising fuel prices and gov-ernment-
mandated fuel economy standards.
But in 2006, new U. S. vehicles still averaged
just 21 miles per gallon; for over two decades,
automakers have put most of their engineer-ing
efforts into building larger vehicles with
more powerful engines, offsetting the poten-tial
fuel economy gains from new technologies.
The time is ripe for another great leap in
vehicle efficiency. New technologies such as
hybrid drive trains, clean- burning diesel
engines, continuously variable transmissions,
and lightweight materials could allow
vehicle fuel economy to double over the
next two decades.
Significant efficiency gains are also possible
in the electricity sector. Americans spend
$ 200 billion annually on electricity, but cur-rent
demand could be halved with cost- effec-tive
technologies already available on the mar-ket.
Furthermore, decreasing electricity
demand reduces the need for new, large
power plants, allowing smaller, distributed,
renewable generation to play a greater role in
meeting our energy needs.
Past experience demonstrates that strong
government policies can spur the private sec-tor
to invest in efficiency improvements. Since
national home appliance efficiency standards
were enacted in 1987,
manufacturers have
achieved major savings
in appliance energy use.
Refrigerator efficiency
nearly tripled between
1972 and 1999, and
dishwasher efficiency
has more than doubled
in the last eight years.
California’s “ Flex
Your Power” campaign,
enacted in response to
the state’s 2001 energy
crisis, immediately reduced power demand by
5,000 megawatts by replacing millions of
standard light bulbs with compact fluorescent
lights ( CFLs), installing light- emitting diode
( LED) traffic lights, and replacing inefficient
appliances. Because of robust efficiency poli-cies,
California has the lowest per capita ener-gy
consumption in the nation, without sacri-ficing
comfort or valued services.
Technologies available today could increase
appliance efficiency by at least an additional
33 percent over the next decade, and further
improvements in dryers, televisions, lighting,
and standby power consumption could avoid
more than half of the projected growth in
demand in the industrial world by 2030.
The integration of efficiency with renew-able
energy maximizes the benefits of both.
For example, the correct building orientation
can save up to 20 percent of heating costs;
those savings can jump to 75 percent when
renewable energy and appropriate insulation
are integrated into the building.
A national commitment to improved
efficiency can transition the U. S. energy
economy in ways that will yield dividends for
all Americans.
A M E R I C A N E N E R G Y 21
I
R E S O U R C E S A N D T E C H N O L O G I E S
EPA
1975 1980 1985 1990 1995 2000 2005
10
15
20
25
5
0
Fuel Efficiency of U. S. Light Vehicle Fleet, 1975– 2006
Miles per gallon
Source: DOT
U. S. EPA's energy efficiency
label.
biofuels
iquid fuels derived from crops and
agricultural wastes are poised to play
a large role in meeting U. S. tranporta-tion
energy needs. In addition to burning
more cleanly than conventional fuels, biofuels
are renewable and can be produced in every
U. S. state. And, more than
any other renewable
energy source, biofuels
can reduce dependence
on imported oil, the vast
majority of which is used
for transportation.
Production of biofuels
also creates jobs and
income in rural communi-ties.
A typical 40 million
gallon per- year ethanol
plant can provide a one-time
boost of $ 140 million
to the local economy.
Once built, the plant increases annual direct
spending in the community while providing
jobs throughout the economy.
Ethanol— a form of alcohol— is the pre-dominant
biofuel in use today. The United
States and Brazil together
produce about 90 percent
of global fuel ethanol.
Sugar cane- based ethanol
accounts for approximate-ly
40 percent of Brazil’s
non- diesel automotive
fuel. In 2006, the United
States passed Brazil to
become the world’s
largest producer.
America’s reliance on
ethanol has grown rapidly
in recent years, and in
2005, ethanol provided just over 2 percent of
U. S. motor vehicle fuel. While higher shares
are used in the Midwestern grain- producing
states where the industry is centered, ethanol
production and use are expanding across
the nation.
U. S. ethanol production doubled between
2000 and 2005, reaching nearly four billion
gallons annually. Currently, most U. S. fuel
ethanol is made from corn, the country’s
largest crop, ensuring a strong basis of sup-port
among U. S. farmers and agricultural
processors. Other feedstock include sorghum,
brewery wastes, and cheese whey.
Ethanol can be blended at low concentra-tions
as a fuel oxygenate and has been the
principal replacement for MTBE ( a fuel
additive that is being phased out because it
is a suspected carcinogen). As of early 2006,
ethanol was mixed into at least 30 percent of
U. S. gasoline. The most common blend is 10
percent ethanol, known as E10, which can
successfully fuel all types of vehicles and
engines that require gasoline. Ethanol is also
used in higher concentrations up to E85 in a
new generation of “ flexible- fuel” vehicles that
have slight engine modifications.
Compared with ethanol, biodiesel is used
on a far smaller scale. But it has recently
become the country’s fastest growing fuel: in
2005, the United States produced about 75
million gallons, up from 500,000 in 1999.
Biodiesel consists of bio- esters that are
typically derived from vegetable oils. Although
a wide variety of crops can be used, soybeans
represent the predominant feedstock in the
United States; canola oil and limited quanti-ties
of animal tallow and recycled vegetable
oils and fats ( often gathered from food
processors and restaurants) are also used.
Biodiesel can be blended with ordinary
diesel fuel at any concentration. Most diesel
vehicles can run on blends of up to 20 percent
with few or no modifications, and a few
engine warrantees allow for use of 100- per-cent
biodiesel. More than 600 vehicle fleets,
ranging from school buses to National Park
Service vehicles, now use biodiesel. The U. S.
Navy, the largest diesel user in the world, has
begun processing its used cooking oil into
cleaner- burning biodiesel.
To promote the sale of biofuels, the federal
government and several states offer excise tax
credits for biofuel blends. Domestically pro-duced
ethanol, for example, receives a 51 cent
per gallon federal subsidy. And biofuels are
becoming more competitive as production
costs fall and oil prices rise. According to the
22 A M E R I C A N E N E R G Y
R E S O U R C E S A N D T E C H N O L O G I E S
L
U. S. Ethanol Biorefinery Locations
Biorefineries in production ( 101)
Biorefineries under construction ( 34)
1980 1985 1990 1995 2000 2005
U. S. and World Fuel Ethanol Production, 1980– 2005
Million gallons
World
United States
0
2000
4000
6000
8000
10,000
12,000
Source: RFA
Source: RFA, F. O. Licht
U. S. Ethanol Biorefinery Locations, 2006
International Energy Agency ( IEA), ethanol
from corn is cost- competitive with gasoline in
the United States ( even without subsidies, and
accounting for ethanol’s lower energy density)
when the price of oil is above $ 45 per
barrel— well below oil’s price in mid- 2006.
Biodiesel costs vary, depending on factors
such as feedstock and production methods,
but the IEA estimates that it is competitive
with oil at about $ 65 per barrel. Costs must
continue to fall, however, if biodiesel is to be
used widely.
Substantial cost reductions are possible
with improvements in manufacturing and
scale economies. Studies show that a tripling
of ethanol plant size can result in a 40 percent
reduction in unit cost. While a typical new
ethanol plant once had a capacity of 40
million gallons per year, many plants now
under construction can produce 100 million
gallons annually.
Biofuels have the potential to reduce
many environmental problems associated
with transportation, but they can exacerbate
others if not developed carefully. The fuels are
essentially a means for converting the sun’s
energy into liquid form through photosynthe-sis.
Yet one of the major concerns raised
about them is their net energy balance— i. e.,
whether the energy contained in these bio-fuels
exceeds the energy ( particularly from
fossil fuels) required to make them. Thanks to
technological advances throughout the pro-duction
process, all of today’s biofuels have a
positive fossil energy balance. If bioenergy is
increasingly used for feedstock processing and
refining as well, the balance sheet tips further
in biofuels’ favor.
There is also concern that, depending on
the feedstock used and how it is grown and
processed, biofuels can negatively affect soil
and water quality, local ecosystems, and even
the global climate. For example, if biofuels
are produced from low- yielding crops, grown
with heavy inputs of fossil energy on previ-ously
wild grasslands or forests, and/ or
processed into fuel using fossil energy, they
have the potential to generate as much green-house
gas emissions as petroleum fuels do, or
more. However, if sustainable feedstock is
used, and it is cultivated in the right way,
biofuel crops can actually
sequester carbon in the
soil, helping to reduce the
amount in the atmosphere
while also reducing soil
erosion and runoff and
providing valuable habitat
for wildlife.
Conventional biofuels
will be limited by their
land requirements: produc-ing
half of U. S. automotive
fuel from corn- based
ethanol, for example,
would require 80 percent
of the country’s cropland.
Thus, large- scale reliance
on ethanol fuel will require
new conversion technolo-gies
and feedstock. Much
attention has been focused
on enzymes that convert
plant cellulose into ethanol. Because cellulose-derived
ethanol is made from the non- food
portions of plants, it greatly expands the
potential scale while reducing competition
with food supplies. According to a joint study
by the U. S. Departments of
Agriculture and Energy, the
nation has enough biomass
resources to sustainably
meet well over one- third
of current U. S. petroleum
needs if cellulosic tech-nologies
and resources
are employed.
Years of research on
enzymes that break down
the cellulose in plants
are nearing commercial
production. Iogen
Corporation, based in
Ottawa, Canada, is already operating a small
facility that can produce up to three million
liters ( about 793,000 gallons) of cellulosic
ethanol annually; plans are under way for a
full- scale commercial plant.
A M E R I C A N E N E R G Y 23
R E S O U R C E S A N D T E C H N O L O G I E S
1992 1994 1996 1998 2000 2002 2004
1000
600
800
200
400
0
U. S. and World Biodiesel Production, 1992– 2005
Million gallons
World
U. S.
Triple biofuels pump.
Source: NBB, F. O. Licht
NREL
Biopower
he same homegrown resources that
can fuel America’s vehicles can heat
and power our industries, businesses,
and homes. Biopower is the process of using
organic matter from America’s fields, forests,
and landfills to generate electricity. It is the
nation’s largest non- hydropower source of
renewable electricity.
Biopower currently
provides only about 2
percent of U. S. elec-tricity,
but it has the
potential to meet a
much larger share of
power demand while
reducing pollution
and revitalizing
rural communities.
America’s biomass
resources range from
agricultural and
forestry residues, to
animal waste, to
fast- growing plants grown solely for energy
production. Landfills can also be tapped, by
capturing methane from biodegrading organ-ic
wastes before it escapes to
the atmosphere. Biomass can
be burned directly to produce
steam, which turns a turbine
to generate power; it can be
co- fired with fossil fuels; and
it can be gasified to produce
steam and electricity, or for
use in microturbines or fuel
cells. Today, most biopower
is used by the forest products
industries, which produce
steam and power with
process residues.
More than 100 U. S. coal- fired power plants
are now burning biomass together with coal.
Experience has shown that biomass can be
substituted for up to 2– 5 percent of coal at
very low incremental cost; higher rates— up
to 15 percent biomass— are possible with
moderate plant upgrades.
According to the Washington Department
of Ecology, the state produces enough bio-mass
to generate over 15.5 billion kWh of
electricity, or almost half of Washington’s resi-dential
power consumption.
Growing energy crops for biopower poses
the same environmental concerns associated
with biofuels. Burning biomass in power
plants releases particles that can affect human
health, as fossil fuel burning does, but pollu-tion
control technologies can remove these
particles from the smokestack. When burned
with coal, biomass can significantly reduce
emissions of sulfur dioxide, carbon dioxide
( CO2), and other greenhouse gases ( GHGs).
Burning biomass destined for landfills also
reduces the amount of organic waste that
would ultimately decompose and release
methane, a GHG that is 21 times more potent
than CO2.
Capturing methane from the decomposi-tion
of organic matter found in landfills,
sewage treatment plants, and livestock facili-ties
provides premium fuel while reducing the
amount of waste that must be disposed of.
Using anaerobic digesters at all U. S. farms
where they would be economical could avoid
emission of an estimated 426,000 metric tons
of methane annually. This practice is starting
to catch hold in large hog, poultry, and cattle
operations, driven by the need to control
emissions and by the lure of selling lucrative
energy. Central Vermont Public Service sells
electricity produced from farm waste directly
to consumers, and will soon generate enough
power for 1,400 Vermont homes.
Biopower can provide baseload electricity,
and plants can be located close to the point of
demand, reducing the need for expensive
upgrades to the power grid and minimizing
transmission losses. In addition, biopower can
generate up to 20 times more local jobs than
natural gas- fired power plants do. Facilities
can range in size from small farm- based
operations to much larger plants.
As with other renewable technologies,
inconsistent availability of subsidies has ham-pered
industry development. In addition, the
permitting process is often time- consuming
and expensive, and a lack of national grid-connection
standards often complicates devel-opment.
These policies must be reformed if
biopower is to fulfill its promise.
24 A M E R I C A N E N E R G Y
Inspecting switchgrass field,
Manhattan, Kansas.
T
1992 1994 1996 1998 2000 2002 2004
62
56
58
60
50
52
54
U. S. Net Electricity Generation from Biopower, 1992– 2005
MillionMWh
R E S O U R C E S A N D T E C H N O L O G I E S
Jeff Vanuga, USDA, NRCS
Source: EIA
Geothermal Energy
eothermal resources represent a
potentially vast supply of domestic
energy, with the ability to provide
dependable, baseload power at stable cost.
Geothermal energy flows from the Earth’s
mantle, reaching the surface in the form of
hot springs, geysers, and volcanoes.
Geothermal systems are designed to bring
underground heat to the surface and convert
it to useful forms of energy.
Low- to- moderate heat resources can be
tapped for a number of direct uses, including
space heating, industrial processes, and green-houses.
All areas of the United States have
nearly constant ground temperatures suitable
for geothermal heat pumps, which use the
earth or groundwater as a heat source in win-ter
and a heat sink in summer to regulate
indoor temperatures. More than 600,000
geothermal heat pumps are operating today,
and the market is growing at an annual rate
of 15 percent. The city of Boise, Idaho, devel-oped
four direct- use district systems that
together heat 366 buildings, including the
state capitol.
The highest- temperature resources can be
used for power generation. Hydrothermal sys-tems,
which transfer the geothermal resource
to power stations via steam, are the primary
technology in use today, but geopressured,
hot dry rock, and magma technologies are
currently under development.
By the end of 2005, geothermal electric
capacity totaled 8,932 MW in 24 countries,
and produced about 57 billion kWh of power
annually. The United States leads the world in
geothermal electric and thermal heat installed
capacity, with more than 2,828 MW of power
capacity operating in four states: California,
Hawaii, Nevada, and Utah. Each year, U. S.
geothermal energy displaces the energy equiv-alent
of more than 60 million barrels of oil,
prevents the emission of 22 million tons of
CO2, and produces $ 1.5 billion worth of
electricity— enough to meet the power needs
of about four million people.
The largest barriers to geothermal develop-ment
have been the initial cost and risk of
proving new resources. Investors may be
deterred because only one in five exploratory
wells is successful. But improved technology is
reducing the risks and costs of exploration.
Together with the inclusion of geothermal
energy in the 2005 federal production tax
credit and state renewable standards, advances
are spurring renewed interest in geothermal
power projects. Projects now planned or
under development in nine western U. S. states
could nearly double current capacity.
The Geothermal Energy Association esti-mates
that by 2025, U. S. geothermal resources
could provide more than 30,000 MW of
power, enough to meet 6 percent of today’s
electricity demand. New development could
create 130,000 new jobs and add more than
$ 70 billion of investment to the economy. But
half of this development potential depends on
continued federal R& D.
Extracting geothermal
energy is nearly emissions
free, but small amounts of
hydrogen sulfide, CO2,
and other gases can be
released. New technolo-gies
are able to reduce
these emissions substan-tially,
if not eliminate
them. CO2 emissions
from geothermal power
plants are a fraction of the
emissions from equivalent
fossil fuel power plants. The land and fresh-water
requirements for geothermal power
plants are among the lowest for any generat-ing
technology, and
district heating sys-tems
and geothermal
heat pumps are easily
integrated into com-munities
with little
visual impact.
Advanced tech-nologies
can convert
lower- temperature
resources into elec-tricity,
allowing the
country to harness a
much larger fraction of its geothermal
resources.
A M E R I C A N E N E R G Y 25
R E S O U R C E S A N D T E C H N O L O G I E S
G
The Geysers, Northern
California.
Calpine Corporation
U. S. Geothermal Resource Areas
Idaho National Laboratory
Power from the Wind
he wind that sweeps across America is
one of the country’s most abundant
energy resources. About one- fourth of
the total land area of the United States has
winds powerful enough to generate electricity
as cheaply as natural gas or coal at today’s
prices. According to government- sponsored
studies, the wind resources of Kansas, North
Dakota, and Texas alone
are in principle suffi-cient
to provide all the
electricity the nation
currently uses.
Although wind
power presently pro-vides
less than 1 percent
of U. S. electricity, it is
poised to expand dra-matically.
Wind energy
technology has
advanced steadily over
the past two decades.
Average turbine size has increased from less
than 100 kW in the early 1980s to more than
1,200 kW today, with machines up to 5,000
kW under development. The largest machines
have blade spans over 300 feet, compared with
roughly 200 feet for
a typical jumbo jet.
Additional ad-vances,
from lighter
and more flexible
blades to sophisti-cated
computer
controls, variable
speed operation, and
direct- drive genera-tors,
have driven
costs down to the
point where wind
farms on good sites
can generate electricity for 3– 5 cents per kilo-watt-
hour. These advances, together with
sharp increases in natural gas prices, have
made wind power the least expensive source
of new electricity in many regions.
Meanwhile, the global wind power market
is advancing rapidly. Installations increased
from 1,290 MW in 1995 to 11,770 MW in
2005. Today, private sector R& D dwarfs
government investment, and the wind power
industry is in a race to drive costs down even
further in the coming years.
Global turbine manufacturing is dominat-ed
by companies based in the largest markets:
Germany, Spain, and Denmark. However, the
United States is still in the game: the world’s
largest power- generation company, General
Electric, entered the wind business in 2002
and has become one of the world’s top tur-bine
producers. On the project development
side, the U. S. industry is dominated by a large,
diversified power company, Florida Power and
Light, which develops and owns wind farms
throughout the country.
The United States led the world in wind
energy capacity in the 1980s, but abrupt
changes in federal and state policies led to
market collapse. Since the 1990s, a new feder-al
tax credit, combined with an increasing
number of supportive state policies, has led to
a growing but episodic market. Short- term
extensions of the federal tax credit, often after
long delays, have caused wild swings in new
installations— from about 400 MW in 2002
and 2004, to approximately 1,700 MW of new
capacity in 2001 and 2003— which have dis-couraged
the industry from making long-term
investments.
Extension of the credit through 2007
helped drive another upswing in 2005: the
United States installed a record 2,431 MW,
adding more wind power capacity than any
other country for the first time in over a
decade. Wind farms were the country’s second
largest source of new generating capacity built
in 2005, after natural gas- fired plants. By the
end of that year, the nation had enough
cumulative wind capacity to meet the
needs of 2.3 million U. S. households, and
trailed only Germany and Spain in total
installations. The industry expects more
record- setting years in 2006 and 2007.
In Denmark and some areas of Germany
and Spain, wind meets more than 20 percent
of electricity needs. The key to success in
these countries is laws that provide renewable
power producers with long- term power pur-chase
agreements at prices sufficient to cover
costs. By maintaining a consistent set of poli-
26 A M E R I C A N E N E R G Y
R E S O U R C E S A N D T E C H N O L O G I E S
T
Trent Mesa Wind Power
Facility ( 150 MW),
Sweetwater, Texas.
GE Wind Energy
1980 1985 1990 1995 2000 2005
70
60
30
20
40
50
10
0
Cumulative Global Wind Capacity, 1980– 2005
ThousandMW
Source: AWEA, EWEA, BTM Consult
cies, and by gradually lowering the purchase
price as technology improves, European
countries have nurtured a wind power indus-try
that is already cost- competitive with new
gas- fired power plants in most countries.
Wind resources in the United States are far
more plentiful than in Europe. The U. S. wind
resource is well distributed across the country,
with the most abundant winds in the Great
Plains, a region that has been described as a
potential “ Persian Gulf” of wind power. And
the Department of Energy estimates that the
offshore wind resource within 5– 50 nautical
miles of the U. S. coastline could support
about 900,000 MW of wind generating capac-ity—
an amount approaching total current
U. S. electric capacity. Although much of this
resource will likely remain undeveloped
because of environmental concerns and com-peting
uses, the nation’s offshore wind energy
potential is enormous, and much of it lies
near major urban load centers.
More fully tapping that wind will require
new policies to provide more- ready access to
existing high- voltage transmission lines, and
in the longer run, the expansion of transmis-sion
capacity to allow Great Plains wind
power to reach cities in the Midwest and on
the West Coast. In the meantime, sizable
wind power projects are planned or being
developed in states from California to New
York, Texas, and Montana. The country’s
largest offshore wind project ( 500 MW) has
been proposed off the Texas coast in the Gulf
of Mexico.
As with all energy technologies, there are
environmental costs associated with wind
power, which have generated opposition from
local residents concerned about the rapid pro-liferation
of new projects in many parts of the
country. The greatest controversy has arisen
from the fact that wind turbines in some loca-tions
have killed significant numbers of birds
and bats. Yet housecats, vehicles, cell phone
towers, buildings, and habitat loss pose far
greater hazards to birds, and progress has
been made in reducing bird strikes through
technological changes, such as slower rotating
speeds, and careful project siting.
On balance, the environmental, economic,
and social benefits of wind power outweigh
the costs. During 2005, wind turbines operat-ing
in the United States offset the emission of
3.5 million tons of carbon dioxide, while
reducing natural gas demand for power gen-eration
by 4– 5 percent. Wind farms can be
permitted and built far faster than conven-tional
power plants. And by some estimates,
every 100 MW of wind capacity creates 200
construction jobs, 2– 5 permanent jobs, and
up to $ 1 million in local property tax revenue.
As new wind farms come on line, a grow-ing
number of electric utility managers are
learning how to integrate an intermittent
resource into their power grids. These grids
are designed to routine-ly
manage variability in
demand and supply.
The amount of wind
power capacity that can
be accommodated
depends on the size of
the regional grid and
the flexibility of other
types of generation
attached to it. In both
Europe and North
America, electric utili-ties
have demonstrated
the ability to manage wind generation that
exceeds 20 percent of total capacity. Higher
shares of wind power will be possible with
modest operational adjustments and better
wind forecasting.
The key to achieving this potential is a
strong and consistent policy framework, at
both the state and federal levels. The on- again
off- again tax credit for wind power and simi-larly
intermittent state policies have under-mined
the stability that companies require to
invest in new installations, technologies, and
factories in a sustained manner.
If solid and consistent policies are imple-mented,
wind power’s contribution to the
U. S. electricity supply could grow rapidly. In
June 2006, the Department of Energy com-mitted
to developing an action plan with the
goal of providing up to 20 percent of U. S.
electricity with wind power.
A M E R I C A N E N E R G Y 27
1980 1985 1990 1995 2000 2005
Annual Wind Power Capacity Additions in
the United States and Europe, 1980– 2005
ThousandMW
- 1
0
1
2
3
4
5
6
7
Europe
United States
Source: AWEA, BTM Consult, Gipe, EWEA, GWEC
R E S O U R C E S A N D T E C H N O L O G I E S
Rooftop Solar Power
olar cells ( also known as photovoltaic
cells, or PVs) that convert sunlight
directly into electricity are one of the
most revolutionary new energy technologies
to be commercialized in recent decades.
These devices are most often composed of
crystalline silicon chips similar to those
found in computers. They are adaptable to
a remarkable range of uses, from handheld
electronic devices to
mountaintop weather sta-tions,
large desert power
plants, and America’s
rooftops. Solar cells can
produce electricity
almost anywhere— the
solar resource in Maine,
for example, is about
75 percent of that in
Los Angeles.
Annual global produc-tion
of solar cells has
increased six- fold since
2000, exceeding 1,700 MW in 2005, and the
industry plans to continue its dramatic
expansion. Global grid- connected PV capacity
increased 55 percent in 2005, to 3.1 gigawatts,
making it the world’s fastest growing source
of power.
Solar cells were originally developed for
use in orbiting satellites and, until recently,
were far too expensive for most earthbound
energy applications. Improved manufactur-ing,
efficiency gains, and economies of scale
in production and installation have steadily
lowered costs. Since 1976, prices have
dropped by about 5 percent annually, and
they continue to fall. New technologies under
development, such as plastic solar cells, nano-materials,
and dye- sensitized solar cells, could
enable the industry to leapfrog far beyond
current technologies, further reducing costs
while improving performance.
Solar power is already the most economi-cal
way of providing electricity in many cir-cumstances,
particularly for small- scale
devices like roadside call- boxes and off- grid
telecommunications installations. Such uses
are important but represent relatively small
markets. Major opportunities exist, however,
for customers who value the security, power
quality, and reliability that PV systems can
provide— for emergency preparedness and
security uses, for example.
Thousands of solar- powered homes have
already been built in the United States— many
of them in suburban neighborhoods, where
excess power is fed into the electric grid,
which later provides electricity for the home
when the sun isn’t shining. In southern
California, builders and developers have
begun promoting solar power as an inviting
new feature. And elsewhere around the coun-try,
PVs are appearing on high- rise apartment
buildings, atop urban metro stations, and on
the rooftops of rural businesses.
In some locations, rooftop solar power is
now competitive with peak electricity prices,
which often coincide with peak sunshine. And
PVs can be cheaper than other façade materi-als,
such as granite or marble, with the added
benefit of producing power.
Solar PV manufacture requires hazardous
materials, including many of the chemicals
and heavy metals used in the semiconductor
industry. However, there are techniques and
equipment to reduce the environmental and
28 A M E R I C A N E N E R G Y
R E S O U R C E S A N D T E C H N O L O G I E S
S
PV panels atop U. S. Coast
Guard Building, Boston,
Massachusetts.
PowerLight Corporation
1980 1985 1990 1995 2000 2005
Cumulative Global Photovoltaic Production, 1980– 2005
MW
0
1000
2000
3000
4000
5000
6000
7000
Source: PV News
safety risks, and the industry is moving
toward recycling of old solar cells.
Japan has led the solar PV industry for
most of the past decade, despite having half
the solar resource of California. Strong incen-tives
from government policies— including
gradually declining rebates, net metering,
low- interest loans, and public education pro-grams—
boosted Japan from a minor player
in the early 1990s to the world’s largest pro-ducer
and user of solar PV within a decade.
Japan’s policies drove down system costs by
more than 80 percent, to the point where
rooftop power is now competitive with
Japanese electricity prices, which are among
the world’s highest.
Today, Japan remains the world’s leading
solar PV manufacturer, accounting for 48 per-cent
of production in 2005, but Germany is
now the leading market. High purchase prices
for PV- generated electricity have been a pow-erful
driver of German demand. Germany
added an estimated 600 MW during 2005
alone— far more than cumulative U. S.
installed capacity. Both Germany and Japan
have reaped significant employment and eco-nomic
benefits from strong policies aimed at
expanding markets and driving down costs.
Spain, the first country to require installation
of PV in new and renovated buildings, will
likely join them soon.
Rapid growth in Japan and Europe has
encouraged major companies— some entering
the energy industry for the first time— to step
up investments in solar PV. These investors
include Japan’s Sharp and Kyocera companies,
oil giants BP and Royal Dutch/ Shell, and
General Electric and Dupont in the
United States.
The United States is the birthplace of the
solar cell industry and, as recently as 1996,
U. S. producers held 44 percent of the global
solar cell market. By 2005, that figure had fall-en
to below 9 percent as markets boomed in
other parts of the world, and U. S. producers
had lost much of the market at home as well.
But this trend could reverse due to new state
policies driving demand.
In early 2006, California state regulators
approved $ 3.2 billion in customer rebates
with the goal of installing 3,000 MW of PV
on the rooftops of one million California
homes, businesses, and public buildings by
2017, up from about 100
MW today. New Jersey,
which offers a rebate and
sales tax exemption for
solar PV, has the second
largest U. S. market
after California.
The International
Energy Agency ( IEA) esti-mates
that PV installed on
appropriate rooftops,
facades, and building
envelopes in the United
States could meet about 55
percent of U. S. electricity
demand. The Solar Energy
Industries Association aims
for PV to provide half of
all new U. S. electricity gen-eration
by 2025; SEIA proj-ects
that by 2020, the PV
industry could provide
Americans with 130,000
new jobs.
Beyond rooftops, solar
cells can replace diesel gen-erators
for water pumping
on America’s farms, wastewater treatment
plants, and other uses. And they can produce
power on a large scale in the U. S. Southwest.
According to an IEA study, very- large- scale
PV systems installed on just 4 percent of the
world’s deserts could generate enough elec-tricity
annually to meet world power demand.
A M E R I C A N E N E R G Y 29
R E S O U R C E S A N D T E C H N O L O G I E S
1993 1995 1997 1999 2001 2003 2005
Annual PV Capacity Additions in Japan,
the United States, and Germany, 1993– 2005
MW
0
100
200
300
400
500
600
700
Japan
Germany
United States
1976 1981 1986 1991 1996 2001
PV Module Prices, 1976– 2004
Module price ( 2005$)
0
10
20
30
40
50
60
70
Source: Strategies Unlimited, BP Solar
Source: Maycock, REN21/ Worldwatch
Desert Solar Power
arge desert- based power plants con-centrate
the sun’s energy to produce
high- temperature heat for industrial
processes or convert it into electricity that is
available when demand is greatest. Resource
calculations show
that just seven states
in the U. S. Southwest
could provide more
than 7 million MW
of solar generating
capacity— roughly
10 times the total
U. S. generating
capacity from all
sources today.
Four concentrat-ing
solar technolo-gies
are being devel-oped.
To date, parabolic trough technology
provides the best performance and lowest cost
of all types of solar power plants. Nine plants,
totaling 354 MW, have
operated reliably in
California’s Mojave Desert
since the mid- 1980s. Dish-engine
and power tower
systems are in earlier
stages of prototype and
commercial development.
Natural gas and other
fuels can provide supple-mentary
heating when the
sun is inadequate, allow-ing
solar power plants to
generate electricity
whenever it is needed.
In addition, heat- storing
technologies are being
developed to extend the
operating times of solar
power plants.
Since the first 14 MW
trough plant was installed
in California in the early
1980s, generating costs
have dropped from 45 cents/ kWh ( in 2005
dollars) to 9– 12 cents/ kWh ( competitive with
peak power). Costs are expected to drop to
4– 7 cents/ kWh by 2020.
Several solar power plants are now being
planned in the U. S. Southwest, spurred by
state requirements that a minimum share of
electricity come from solar technologies.
Renewed federal support and rising natural
gas prices have also stoked new interest in
concentrating solar power. Solargenix is
constructing a 64 MW trough plant in
Nevada that should be operational in early
2009. While earlier trough plants needed a 25
percent natural gas- fired backup, this plant
will require only 2 percent backup. Stirling
Energy Systems has signed power purchase
agreements with two California utilities
totaling 1,750 MW and plans to begin con-structing
a 1 MW pilot plant in California
by the end of 2006.
Utilities in states with large solar resources
( Arizona, California, Nevada, and New
Mexico) are considering installation of solar
dish systems as well. No commercial central
receiver or tower plants have been built to
date, but an 11 MW generator is under
construction in Spain. According to the
Western Governors’ Association Solar Task
Force report, within the next decade, 4,000
MW of central solar plants could be installed
in the United States, generating thousands
of new jobs.
For solar energy to achieve its potential,
plant construction costs will have to be fur-ther
reduced via technology improvements,
economies of scale, and streamlined assembly
techniques. Development of economic storage
technologies can also lower costs significantly.
The U. S. Southwest has some of the most
valuable solar resources in the world, with
much of this potential close to major urban
areas and on land that has few if any
alternative economic uses. According to the
National Renewable Energy Laboratory, a
solar plant covering 10 square miles of
desert would produce as much power as the
Hoover Dam. Desert- based power plants
could well provide a large share of the
nation’s commercial energy.
30 A M E R I C A N E N E R G Y
R E S O U R C E S A N D T E C H N O L O G I E S
Solar power facility at Kramer
Junction, California.
L
Concentrating Solar Technologies
Parabolic trough technologies track the sun with
rows of mirrors that heat a fluid. The fluid then pro-duces
steam to drive a turbine.
Central receiver ( tower) systems use large mirrors
to direct the sun to a central tower, where fluid is
heated to produce steam that drives a turbine.
Parabolic trough and tower systems can provide large-scale,
bulk power with heat storage ( in the form of
molten salt, or in hybrid systems that derive a small
share of their power from natural gas).
Dish systems consist of a reflecting parabolic dish
mirror system that concentrates sunlight onto a small
area, where a receiver is heated and drives a small
thermal engine.
Concentrating photovoltaic systems ( CPV) use
moving lenses or mirrors to track the sun and focus its
light on high- efficiency silicon or multi- junction solar
cells; they are potentially a lower- cost approach to
utility- scale PV power. Dish and CPV systems are well
suited for decentralized generation that is located
close to the site of demand, or can be installed in
large groups for central station power.
Solar Heating
he sun’s energy could provide much of
the heating and cooling for America’s
homes and industries. Solar water
heaters, which have been used for decades, are
a particularly convenient way to use the sun’s
energy. Simple rooftop collectors made of
steel, glass, and plastic heat water, while
natural gas or electricity is used for backup
when the sun isn’t shining.
Solar systems can be used from New
England to California and are more cost-effective
in Chicago than Miami, due to
Chicago’s higher energy prices. In some cli-mates,
solar heaters can provide up to 80 per-cent
of a home’s hot water.
Residential solar water heating systems ini-tially
cost between $ 1,500 and $ 3,500, com-pared
to $ 150–$ 450 for electric and natural
gas water heaters, but they typically pay for
themselves in 4– 8 years through fuel savings.
Savings continue for the remaining 15– 40
year life of the system. Newer systems with
low- cost plastic polymers and highly efficient
vacuum tubes are providing new options and
lower costs.
The United States led the solar heating
industry in the 1980s, but since then the
almost complete elimination of government
incentives, combined with falling natural gas
prices, left the United States far behind. More
than 1.5 million U. S. homes and businesses
now use solar water heating, and their systems
produce enough energy annually to offset the
output of a nuclear power plant. Only about 8
percent of these systems are used for water
and space heating; the rest heat swimming
pools. Hawaii leads the nation in per capita
use of solar water heating, thanks to utility
rebate programs and the lack of natural gas,
which have driven significant demand for
residential systems.
Solar energy is being tapped for space
heating in commercial and industrial build-ings
as well. Typically, a building’s south- fac-ing
wall is covered with dark- colored perfo-rated
metal sheeting, which collects solar heat
that is distributed into the building through
conventional ductwork. Up to 80 percent of
available solar radiation is converted to heat.
Solar space heating systems are more expen-sive
than water
heating sys-tems,
but will
become more
competitive as
conventional
heating costs
rise. And solar
energy can be
used for cool-ing
via the
oldest form of
air condition-ing
technolo-gy—
absorption
cooling— with the same devices used to
provide heat in the winter.
Worldwide, solar heating is booming:
the global market doubled
between 2000 and 2005,
with the greatest increases
in China and Europe. The
International Energy
Agency estimates that total
global installations of solar
heating panels for all uses
amount to about 196
million square yards,
enough to cover the equiv-alent
of more than 30,000
football fields.
A Department of
Energy study projects that
half of residential space
heating and 65– 75 percent
of water heating needs
could be met with solar.
But stronger government
support at the federal,
state, and local levels will
be needed if the United
States is to keep up with
the solar heating boom in
other countries.
A M E R I C A N E N E R G Y 31
R E S O U R C E S A N D T E C H N O L O G I E S
T
1995 1997 1999 2001 2003 2005
Total World Solar Water Heating Capacity
( excluding pool systems) 1995– 2005
Million square meters
20
40
0
60
80
100
120
140
Solar Hot Water Capacity, by Country/ Region, 2005
( excluding pools)
Others 4%
U. S. 2%
Brazil 2%
Israel 4%
Japan 6%
Turkey 6%
China 63%
E. U. 13%
Source: REN21/ Worldwatch
Source: IEA, Martinot
SunEarth Inc.
Solar water heating system
atop a commercial buidling.
Hydropower
ydropower uses the natural energy of
falling and flowing water to produce
electricity or mechanical energy.
Water wheels were widely used to grind
grain and later to run America’s factories
until grid- connected
electricity freed
industrial processes
to locate away from
falling water.
Today, hydro-power
provides
about one- fifth of
the world’s electricity
and nearly 7 percent
of U. S. power— the
largest share of any
renewable resource.
In 2004, hydropower
generated 270 billion
kWh of electricity in
the United States, a figure that has remained
roughly constant for three decades.
Hydropower plants cost relatively little to
run and can be operated and maintained by
trained local staff. They generally have a long
project life: equipment such as turbines can
last 20– 30 years, while concrete civil works
can last a century or more.
Unlike most power plants, the amount of
electricity generated at hydro dams can be
quickly increased or decreased, giving regions
that have a large portion of hydro genera-tion—
like the Pacific Northwest— added
flexibility in how they operate their power
systems. Hydropower can help maintain grid
stability and can be called up when other
power sources fail. Flexibility allows for a
sizable share of intermittent renewable
capacity from solar or wind energy— which
can be easily backed up with hydropower.
In principle, U. S. hydropower generation
could be increased significantly. The
Department of Energy ( DOE) reports that
hydropower could double its current contri-bution
of more than 78,000 MW. According
to DOE, 21,000 MW of capacity could be
added simply by improving existing projects
and installing generators at dams that do
not have them. Of the 80,000 dams in the
United States, only 3 percent are used to
generate electricity.
Despite this potential, the industry has
experienced sluggish growth over the past
decade. As with other renewables, upfront
capital costs are high. The licensing process
can be time consuming and costly, and the
lack of tax incentives for hydropower has
served as a disincentive to growth.
In the past, extensive damming of rivers
has destroyed unique landscapes and elimi-nated
fish habitats. Critics argue that habitat
alteration, disruption of fish migrations,
trapping of sediment, displacement of com-munities,
and greenhouse gas emissions from
rotting organic material are among the possi-bly
irreversible impacts of hydropower. The
industry is pursuing a variety of measures to
reduce such impacts.
The vast majority of the nation’s
hydropower comes from large- scale facilities,
but a significant share of U. S. hydro plants
today are micro- scale ( up to 100 kW) or
small- scale systems ( 100 kW to 30 MW).
Rather than using a large dam and storage
reservoir, micro- and small- scale projects gen-erally
use “ run- of- river” designs that produce
electricity by diverting only part of a stream.
Most consist of small turbines that rely on
water pressure or velocity to generate power.
Small hydro facilities often have difficulty
gaining affordable grid connections, and
power purchase agreements with utilities are
generally required for independent power
producers to operate such systems. And even
small hydro is hindered by the perception that
it can adversely affect fishing. But environ-mental
impacts can be curtailed through
good system design and appropriate construc-tion
and operating practices. Small- scale
hydro systems cause little change in stream
channel and flow, and thus have minimal
impact on water quality, fish migration, and
surrounding habitat.
32 A M E R I C A N E N E R G Y
R E S O U R C E S A N D T E C H N O L O G I E S
Tygart River, West Virginia.
NREL
H
Hydropower Generating
Capacity in Top 10
U. S. States, 2005
Washington 21,010 MW
California 13,475 MW
Oregon 8,261 MW
New York 5,659 MW
Tennessee 3,950 MW
South Carolina 3,455 MW
Georgia 3,313 MW
Virginia 3,091 MW
Alabama 2,961 MW
Arizona 2,890 MW
Source: EIA
Marine Energy
ust off America’s coastlines are energy
resources with the potential to contri-bute
substantially to the U. S. economy.
Oceans cover roughly 70 percent of the
Earth’s surface and collect and store a tremen-dous
amount of heat from the sun as well as
mechanical energy in the form of tides and
waves. Seawater is about 800 times as dense as
air, so even slow velocities of water contain
enormous quantities of energy. Globally, wave
and ocean thermal energy individually are
estimated to be of the same order of magni-tude
as present world energy demand, while
energy from tides and currents is capable of
making a roughly 10 percent contribution.
From the Middle Ages until the Industrial
Revolution, tide mills were common sights
along the coasts of western Europe. Today,
tidal power is the most commercially
advanced of the ocean energy technologies,
and recent innovations in tidal power tech-nologies
avoid the environmental impacts of
damming bays or estuaries. Other forms of
modern marine energy conversion are still
at the early stages of development, with a
variety of technology types being explored.
Engineers consider these technologies to be
10– 20 years behind wind power, but to be
coming of age rapidly.
Small- scale wave and tidal current projects
are now being installed around the world.
Europe, Australia, and Japan are further along
in development of these sources than the
United States, primarily because of more
extensive government support. As a result,
major private investors such as Electricité de
France are now involved in prototype projects.
Recently, a few U. S. states, cities, and elec-tric
utilities have begun to fund research and
commit to purchasing electricity from
demonstration plants. Small projects have
been proposed for the cities of New York
and San Francisco and off the coasts of
Massachusetts, Washington, Oregon, and
Hawaii. A tidal project planned for New
York’s East River could eventually provide
power for 8,000 homes.
While ocean thermal energy and current
energy are concentrated in specific areas
( Hawaii for ocean thermal and Florida for
current energy), most coastal states could tap
their wave and tidal energy. Ocean energy
resources are generally more
consistent than wind or
solar energy, and offer
significant potential for job
creation in coastal commu-nities
where shipbuilding
and commercial fishing
are in decline. The Electric
Power Research Institute
( EPRI) estimates that U. S.
near- shore wave resources
alone could generate some
2.3 trillion kWh of electricity
annually, or more than eight
times the yearly output from
U. S. hydropower dams.
U. S. ocean energy devel-opers
face significant regu-latory
uncertainty when it
comes to siting and licens-ing
projects, which makes it
difficult to obtain financing.
A one- megawatt wave ener-gy
project off the coast of
Washington state has faced
more licensing hurdles than
those confronted by most
large- scale fossil fuel plants
because of jurisdictional
uncertainty.
Marine energy is not yet
economically competitive
with conventional energy,
but it is already attractive
for islands and isolated
coastal communities that
are off the grid. A recent
EPRI report concluded that
electricity generation from
wave power, for example,
could be economically feasi-ble
in the near future.
Ocean Power Technologies,
the world’s first publicly
traded wave power compa-ny,
claims that total costs
will be 3– 4 cents/ kWh for 100 MW systems.
A M E R I C A N E N E R G Y 33
R E S O U R C E S A N D T E C H N O L O G I E S
J
Marine Energy Technology Options
Tidal Power Tidal power technologies harness
energy from the rise and fall of the tides, using
dams to trap water in a bay or estuary at high tide.
When the ocean level outside the dam has fallen
enough to create a sufficient pressure difference,
the trapped water is returned to the sea through
conventional hydroelectric turbines. Tidal power has
the advantage of being fairly predictable. Such
plants have been in use for decades in Canada,
China, Russia, and France ( where the largest system,
240 MW, is operating).
Ocean Current Power Ocean currents, such as the
Gulf Stream off the U. S. East Coast, are in effect
massive rivers in the world’s oceans, and they repre-sent
enormous quantities of energy. Technologies
that harness these energy flows look like undersea
wind turbines. A handful of prototype turbines now
operate in the United Kingdom and Norway, and at
least two U. S. companies are developing ocean cur-rent
turbines. Ocean current energy is very site- spe-cific
( in the United States, only the eastern coast of
Florida has significant potential), but it has the
advantage of being highly predictable.
Wave Energy Some wave energy devices consist of
a floating buoy or hinged- raft that uses pistons to
pump fluid through hydraulic motors. Oscillating water
column devices use the up- and- down motion of the
water surface in a “ capture chamber” to alternately
force air out and draw it in through a pneumatic tur-bine.
Only a few wave energy devices have been
demonstrated in the ocean for more than a few
months, mainly in Europe and Japan. The greatest
potential is close to coastlines, often in areas
with high population densities, such as the U. S.
West Coast.
Ocean Thermal Energy Conversion ( OTEC) OTEC
harnesses the temperature difference between sun-warmed
surface waters of the tropical ocean and
deep water at near- freezing temperatures. Warm
water is used to vaporize a working fluid, which
expands through a turbine and is then condensed by
the deep, cold- water, enabling continuous flow of
vapor through the turbine to generate electricity or to
split seawater into hydrogen. In the tropics, the
required temperature difference is nearly constant,
so OTEC can provide baseload power. Small “ proof-of-
concept” experiments have been conducted in
Hawaii and Japan, but no full- scale OTEC plants
have been built.
American Energy Policy Agenda
merica needs a fresh and innovative
approach to energy policy. Today’s
energy system has been shaped by a
century of government subsidies and regula-tory
support. Even today, fossil fuels receive
billions of dollars of federal
subsidies each year, while
the health, environmental,
and security costs of those
fuels are paid by society at
large— and are not reflected
in the market price of energy.
Over the past three
decades, governments in the
United States and abroad
have experimented with a
variety of policies to pro-mote
renewable energy and
improve energy efficiency. Although frequent
shifts in government support have hindered
development, policymakers can learn much
from these experiences, which will help to
build a policy framework that allows renew-able
energy to
flourish.
Across the
United States
and around
the world,
there is one
clear lesson
from past
policy experi-ments:
wher-ever